November 4, 2009

AOL Ad Revenues Decline by 18% in Q3 2009

Time Warner has reported its earnings for the third quarter of 2009 and the news isn't so pretty for AOL. Overall revenues declined 23% to $777 million.

The decline resulted from an 18% decrease in advertising revenues as well as a 29% decline in subscription revenues. Time Warner said the decline in ad revenues was due to lower paid search and display ads on AOL Media, reduced ad sales on third party sites and foreign exchange rates.

AOL averaged 102 million U.S. unique visitors per month and 44 billion domestic page views, which translates to 144 pages per unique visitor.

Last spring, Time Warner announced plans to spin off AOL. And recently a Board of Directors was named for the soon-to-be-independent company.

Posted by Nathania Johnson at 12:23 PM | Permalink | Comments (0)

February 4, 2009

AOL Not the Bright Spot in Time Warner's Q4 2008 Earnings

While search was a bright spot in the earnings of Yahoo and Microsoft, and Google beat Wall Street estimates, AOL is not faring as well.

Time Warner released its 2008 fourth quarter earnings and AOL lost 18% in ad revenue. Last year, Time Warner announced that it would split AOL into two: media and internet access. The access division didn't fare any better with subscriptions down 27%.

Time Warner has been trying to sell AOL. In the past year, they've talked to both Microsoft and Yahoo about a deal, but so far nothing has been negotiated.

Posted by Nathania Johnson at 11:23 AM | Permalink | Comments (0)

November 5, 2008

AOL Ad Revenues Drop 6% in Q3 2008

Revenue for AOL's advertising dropped 6% in the third quarter of 2008. Total revenues for AOL dropped 17% but that's primarily due to declining subscription rates.

AOL is in the midst of a business model shift - from one based on internet access subscriptions to one based on advertising. That shift, of course, is coming at quite the rough economic patch for the country in general.

AOL is also looking into joining forces with Yahoo, who also posted dismal Q3 results. Both companies expect Q4 to be even worse.

Posted by Nathania Johnson at 11:07 AM | Permalink | Comments (0)

November 7, 2007

AOL Adds Quigo to Platform A

AOL has confirmed the acquisition of Quigo, a contextual ad network serving text, display and video ads. Quigo's distribution network includes several A-list publishers, including ESPN, Forbes, Time Inc. magazine sites, CareerBuilder, and McClatchy's newspaper sites.

Quigo will be added to AOL's growing Platform A division, formed in September. That unit includes Advertising.com, AOL-run sites, Tacoda, Third Screen Media and AdTech.

AOL parent Time Warner also reported earnings today. AOL advertising revenues rose 13 percent year-to-year to $61 million, which was not enough to counteract a 56 percent plummet in subscription revenues.

Time Warner also announced this week that Chairman and CEO Dick Parsons will step down at the end of the year, and COO Jeff Bewkes will take his place. That move, along with the moves to beef up AOL's ad business, have many guessing that the company will be split up soon.

Posted by Kevin Newcomb at 11:41 AM | Permalink

October 30, 2006

Yahoo To Buy AOL? Sell To Microsoft? Merge With eBay? Or Keep Status Quo?

Fortune reports that rumors are spreading that Yahoo is in talks with Time Warner about buying AOL. The article says, "FORTUNE has learned from multiple sources that Yahoo recently approached Time Warner about buying America Online." That rumor was shot down by Time Warner explaining "that there are no active conversations between the two companies." So the article then goes into what-if scenarios. What if Yahoo did buy AOL? What if Yahoo sold out to Microsoft? What if eBay and Yahoo merged? And what if Yahoo kept with the status quo?

Posted by Barry Schwartz at 9:40 AM | Permalink

March 29, 2006

Google Reaches Definitive Agreement To Buy 5% Stake In AOL

Reuters reports that Google has finally reached an agreement with AOL to buy a 5% stake in the company. You can view the update here that says, in part; "On March 24, 2006, the parties signed definitive agreements governing this $1 billion investment in AOL and Google expects that the investment will close in the second quarter of 2006." So Google needs to hand over $1 billion in cash to AOL to acquire a 5% equity interest in AOL.

Posted by Barry Schwartz at 4:09 PM | Permalink

January 24, 2006

When Carl Talked to Barry: Sources Say Time Warner Investor Carl Icahn Has Had Conversations with IAC/InterActive (Ask Jeeves) CEO Barry Diller

According to this Fortune.com story: Time Warner: Is Icahn looking to deal with Diller?, that legenday investor Carl Icahn (controls about 3.1% of outstanding TW shares) and who is preparing to wage a proxy fight for control of the TW Board of Directors has had conversations with IAC/InterActive president, Barry Diller.

From the article: Icahn is also seeking to merge some of Time Warner's businesses -- AOL, the TV networks, and the movie studio -- with an Internet portal. A source says Icahn has had discussions with one or more portals about combining the businesses and then spinning off the publishing and cable operations. And other sources confirm there have been discussions between Icahn's camp and IAC, the Internet company run by Barry Diller [and new owner of Ask Jeeves]. How could Icahn pry those businesses out of Time Warner using IAC, given that TWX is nine times bigger than IAC? That's unclear. It's possible that Diller, Icahn, and [Bruce] Wasserstein could come up with additional partners. [My emphasis]Right now Diller says the discussions are neither hot nor ongoing.

Is a discussion(s) between Icahn and Diller a surprise? Not really.

You probably remember that right before the Google/AOL deal was announced last month, Icahn issued a public statement calling that the Google deal a "disasterous decision," if it, "makes it more difficult in any way or effectively preclude a merger or other type of transaction. In a statement he specifically mentions the names of four companies:

IAC/InterActive
eBay
Yahoo
Microsoft

Icahn's statement added: ...a recent Goldman Sachs report concludes, "In contrast to the conventional perspective, we believe that eBay, followed by InterActive Corp, would provide greater incremental benefits to AOL's option value with fewer conflicts of interest than Yahoo! while MSN and Google would provide the least incremental benefits."

Interesting days indeed. Stay tuned.

Posted by Gary Price at 11:56 AM | Permalink

December 23, 2005

Google's AOL Stake Rolling Into Holding Company It Can Take Public In 2008

I got a research note from Ben Schachter over at UBS Investment Research flagging that Google has now filed an 8-K form on the AOL deal that sheds light on some new details, include rolling its AOL stake into a new company that it can take public in 2008. You'll find the filing here. Highlights below:

Some of the exact details of the agreement are still being worked out. That's expected to complete the first quarter of next year.
Should some details not be agreed, a resolution will be reached through binding arbitration.
Google is going to hold its 5 percent share of AOL through a new limited liability company (either called HoldCo or that being the term used to indicate a yet to be named holding company)
Google can sell the HoldCo interests in a public offering as of July 1, 2008 or afterward (so you're were right, John -- it is a second IPO, but in a different way than you thought!).
AOL can prevent a sale by exercising its right to purchase HoldCo from Google at an appraised fair market value.
The deal runs for five years, substantially longer than any previous deal Google and AOL have had.
It covers AOL being able to sell text ads on its own site in addition to carrying the same type ads from Google.
It covers AOL being able to sell display ads on the Google network.
It covers AOL being promoted on Google "consistent with Google principles," plus AOL receiving ad credits.
Google will fund marketing efforts for AOL through third party media outlines to promote agreed upon properties.
It covers the previously promised help for AOL and Time Warner to understand how to be indexed by Google better: "We have agreed to assist AOL and Time Warner in understanding our published and/or publicly available tools for improving the accessibility of a web site?s content to Google?s web crawlers."
Google Talk users will have to register their names with AIM in order to interact with AIM clients.

Posted by Danny Sullivan at 10:42 AM | Permalink

December 20, 2005

Google/AOL Deal is a Go: AIM and Google Talk To Become Interoperable, White Labelling of Google Ad Technology, and Expansion of Display Ads on Google Network All Part of "What's New"

Reuters is reporting that the deal $1 billion deal that has Google buying a 5% stake in AOL is a go after being approved at today's Time Warner Board Meeting.

A press release from Time Warner officially confirms it's a go.

The news release calls the deal an expansion of the AOL/Google strategic partnership that's been around for three years.

Here are some highlights from the news release.

What's new? In my original post from last week I wondered aloud if a this new AOL/Google deal would mean anything in the IM world where AOL's AIM is the market learder and the new Google Talk. Would interoperability be possibility? It looks like my thoughts were right along with what was being discussed between the two companies.

News release passages in italics: + Google Talk users and AIM users will be able to communicate with one another if, and the following is a direct quote, "if certain conditions are met."

+ Collaborating in video search and showcasing AOL's premium video service within Google Video I spent quite a bit of space speculating on what this might mean for AOL Video and Google Video now and in the future my post from last Friday. Between the two companies they sure have a good chunk of video search technology.

+ Creating an AOL Marketplace through white labeling of Google's advertising technology - enabling AOL to sell search advertising directly to advertisers on AOL-owned properties.

+ "Expanding display advertising throughout the Google network." Exactly what type of display ads and where they will be seen is not specified. Danny has blogged about Google and displayed ads (before this official announcement).

+ Making AOL content more accessible to Google Web crawlers. Again, what this precisely means was not made clear in the release. I guess placement of this content is what many of us are wondering about. Danny's article linked above also talks about the, "SEO advice Google already gives other large companies as part of the sales pitch and support to get them to buy ads."

+ Providing AOL marketing credits for its Internet properties.

Non-US AOL and Google have also agreed to extend the term of their existing European relationship, and, subject to mutual agreement, they may extend the AOL Marketplace internationally. In addition, Google, AOL and Time Warner may choose to expand the new partnership to Time Warner's other advertising opportunities.

Bottom Lines and Comments from Management: + "The agreement creates a global online advertising partnership, makes more of AOL's industry-leading content available to Google users, and includes a $1 billion investment in AOL by Google."

+ Google will become the only shareholder in AOL other than Time Warner. Google will have certain customary minority shareholder rights, including those associated with any future sale or public offering of AOL.

+ Time Warner Chairman and Chief Executive Officer Dick Parsons said: "We're very pleased to build significantly on our special relationship with Google in a way that will meaningfully strengthen AOL's position in the fast-growing online advertising business and help drive more advertisers to its Web properties...A critical piece of this strategic alliance will be our content, which we will be making more accessible to Google users."

+ "We've also created a simple way for AOL Marketplace advertisers to buy and place search-related advertising across the AOL network. This partnership is an important next step for our companies." --Eric Schmidt, Google CEO

+ "AOL and Google have a very successful history working together, and this is an opportunity to take it to a new level that will benefit both companies and the customers we serve. We are excited about working with Google on the next generation of AOL products, while further expanding our presence on the Web. This is a great moment for AOL." -- Jonathan Miller, AOL's Chairman and Chief Executive Officer

Additional Coverage From + News.com + Wall Street Journal (sub req.)

Posted by Gary Price at 6:47 PM | Permalink

December 19, 2005

Time Warner Investor Works to "Derail" Rumored Google/AOL Deal

Legendary investor, the 24th richest man in America, and a major holder of Time Warner stock, Carl Icahn, is not happy with the rumored AOL deal with Google and according to this News.com story*, is working to "derail" the deal.

From the article: "Like all shareholders, I am not opposed to Time Warner entering into an AOL transaction that creates long-term value. However, I am deeply concerned that the Time Warner board may be on the verge of making a disastrous decision concerning an agreement with Google if this agreement would make it more difficult in any way or effectively preclude a merger or other type of transaction with companies such as (InterActiveCorp), eBay, Yahoo or Microsoft." Icahn wrote in an open letter to the Time Warner board of directors.

The full text or Mr. Icahn's letter is available here.

The letter includes the following paragraph where Icahn questions of Google is the best partner for AOL: I also question whether Google is the best partner for unlocking the value of the AOL asset. Indeed, a recent Goldman Sachs report concludes, "In contrast to the conventional perspective, we believe that eBay, followed by InterActive Corp, would provide greater incremental benefits to AOL's option value with fewer conflicts of interest than Yahoo while MSN and Google would provide the least incremental benefits."

Icahn has been building support for a proxy fight to split AOL off before last Friday's news.

Icahn's letter goes on to say: The real risk for Time Warner shareholders is that a Google joint venture may be short sighted in nature and may preclude any consideration of a broader set of alternatives that would better maximize value and ensure a bright future for AOL.

Once again, I am not opposed to the Board using its business judgment to enter into a transaction with Google or another suitor so long as the transaction does not destroy or impede Time Warner's flexibility to unlock shareholder value in the near and long term.

We should know more later this week afer the Time Warner Board Meeting.

More coverage of the possible Google/AOL deal is available here.

* Postscript: On Jan. 24, 2006 I noticed that the live version of the News.com story was no longer available. That's why we are now linking to a cached version.

Posted by Gary Price at 4:11 PM | Permalink

December 7, 2005

Google and Microsoft Play "The Price is Right" with AOL

According to a Reuters story (via News.com): Microsoft, Google still vying for AOL: that proposals from both Microsoft and Google have been submitted to AOL to "strike an internet advertising partnership" with the company.

Julia Angwin And Kevin J. Delaney in the WSJ (sub required) write: People familiar with the matter said that under the proposal being discussed, AOL, whose current ad partner is Google, would switch to using Microsoft's search engine, and the two companies would set up a joint venture to sell online advertising across both AOL and Microsoft's MSN portal. The services would remain under control of their respective owners, but their ads would reach many more online customers than they do now, these people said.

But Google remained in its own partnership talks with Time Warner late yesterday and still could emerge on top, these people cautioned. A sticking point so far has been its reluctance to guarantee Time Warner a minimum amount of revenue, which Microsoft has done, said one person familiar with the talks.

Reuters reports that at least another round of negotiations are likely and we might learn of a final decision by Christmas.

In other talks, Comcast Corp., which sources said was considering a joint deal with Google, is now also seeking a separate arrangement with AOL, regardless of the outcome. The top U.S. cable operator is discussing how it can market its high-speed Internet service to AOL's dwindling but still large dialup customer base, among other topics.

Micrsoft CEO, Steve Ballmer, while in DC remained quiet on any sort of deal but said:

Online advertising is of keen interest to us, and I have absolutely nothing to say about the AOL deal or (any) deal whatever," Ballmer said. "If you ask, particularly our consumer-facing businesses, what will be the most rapidly growing revenue stream at Microsoft, it's absolutely going to be advertising.

Posted by Gary Price at 1:34 PM | Permalink

November 14, 2005

November 10, 2005

Yahoo No Longer Bidding for Piece of AOL

Reuters and the Wall Street Journal report that Yahoo is no longer interested in getting a piece of the AOL pie.

After we learned what their proposed deal terms were, we passed and we've never looked back," a Yahoo spokeswoman said on Thursday, confirming a report in the Wall Street Journal.

She denied that the company had made an offer for AOL but confirmed that Yahoo Chief Executive Terry Semel met with Time Warner chairman Richard Parsons in October.

The full text of that Wall Street Journal article is here. This week acccess is free to non-subscribers.

The article reports that AOL is still in talks with Microsoft and Google/Comcast.

Posted by Gary Price at 10:55 AM | Permalink

September 23, 2005

Time Warner Keeping AOL

Via Threadwatch, Time Warner Head Says AOL Is the Company's Future from the New York Times covers how Time Warner sees AOL as a key asset for Time Warner to improve, suggesting that it's not going to sell some or all of it to MSN. We do know that MSN and AOL have been talking. That's not a surprise. Next month is the earliest date I can estimate that the Google deal to power AOL's search may expire. MSN would obviously like to grab that audience share as a way of further enticing advertisers over to its new ad system that's slowly being rolled out. Naturally, Google would love to keep that business and will be making all the right overtures to AOL. You can also expect Yahoo will be talking to try and gain back an important traffic source it lost to Google years ago -- and Ask Jeeves will be doing some talking, as well.

Posted by Danny Sullivan at 7:22 AM | Permalink

May 5, 2005

Time Warner Sells 5.1 Million Shares of Google Stock

Both Searchblog and Reuters report that Time Warner has sold the remaining 5.1 million shares of Google stock the company owned. Time Warner made about $925 million from the sale of the GOOG shares. The sale of TW's Google stock is discussed on page 7 of this SEC filing.

Posted by Gary Price at 10:35 AM | Permalink

February 4, 2005

Time-Warner Owns More than 5 Million Shares of Google

The Reuters article: Broadband boosts Time-Warner profit discusses the media conglmerates latest earnings and also points out that T-W is a major shareholder of Google stock. If you check the SEC filing you'll find a section about Google.

Further, in relation to Google, in May 2004, America Online exercised a warrant for approximately $22 million and received approximately 7.4 million shares of Series D Preferred Stock of Google Inc. Each of these shares converted automatically into shares of Googles Class B Common Stock immediately prior to the closing of Googles initial public offering on August 24, 2004. In connection with this offering, America Online converted 2,355,559 shares of its Google Class B Common Stock into an equal number of shares of Googles Class A Common Stock. Such Class A shares were sold in the offering for $195 million, net of the underwriters discounts and commissions, resulting in a gain of approximately $188 million. Following this transaction, America Online holds 5,081,893 shares of Googles Class B Common Stock...The Company does not consider its remaining interest in Google to be a strategic investment.

Two major "institutional shareholders", Fidelity Management and Capital Research & Management own approximately the same amount of shares.

Posted by Gary Price at 10:02 AM | Permalink

December 8, 2004

AOL Ad Revenue and Search

Media Post has more details on Time Warner's CEO Richard Parsons commenting about AOL nearing the one billion dollar mark in ad revenue.

[Mike] Kelly [president of AOL Media Networks] says the AOL division's revenues are derived from a combination of cost-per-click (CPC), pay-for-performance, and brand advertising, as well as revenues from AOL Europe. One-third of AOL's advertising revenue comes from search revenue via the company's relationship with Google, and through direct search from AOL, according to Kelly. That percentage is expected to grow, although it was unclear by how much.

Lots more numbers in the article.

Posted by Gary Price at 3:32 PM | Permalink

December 3, 2004

On AOL's Plans

Short article in the Wall Street Journal today (sub req) about AOL's move plans to offer moore free content for non-subcribers.

John Buckley, an AOL spokesman, says the current free site is basically a marketing tool for the paid subscription service. "You can look at the current [free] site as a Yugo," Mr. Buckley said, referring to a low-cost Yugoslavian car. "We're going to build a Bentley."

Posted by Gary Price at 3:16 PM | Permalink

November 9, 2004

AOL vs. Yahoo?

Plenty of press attention today about a major reorganization at AOL. The company also has plans to take on Yahoo by launching a free, ad-supported, version of the service. More in Saul Hansell's NY Times article: AOL's Chief Revamps It, With an Eye on Yahoo.

Posted by Gary Price at 1:56 PM | Permalink | Comments (0)

November 3, 2004

$30 Million Jump in Domestic Paid Search Ads at AOL

The Washington Post takes a look at the Time Warner earnings announcement in: Time Warner Sets Aside Legal Reserve.

On Paid Search and AOL: AOL's sales in the quarter rose 1 percent to $2.1 billion, reflecting a $79 million surge in advertising revenue, an increase of 44 percent, which was offset partly by a $52 million drop in subscription revenue, a decline of 3 percent.

The growth in ad revenue included a $30 million jump in domestic paid search ads and a $35 million increase related to AOL's acquisition this summer of Advertising.com.

More in the Clickz article: AOL's Ads Surge, Subscriptions Drop

Posted by Gary Price at 1:43 PM | Permalink | Comments (0)

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