(7 February 2008 3:25 pm)

MUMBAI: Time Warner Inc. is splitting up AOL's internet access and online advertising businesses, and it is close to a decision on whether to spin off Time Warner Cable, chief executive Jeffrey Bewkes said on Wednesday.

Since Bewkes took charge on 1 January, investors have pinned their hopes on him to reshape and slim down the conglomerate, whose properties include networks CNN, HBO and TNT; the Warner Bros. film studio and the Time Inc. magazine family.

"Most of our businesses are No. 1 in their sectors, but the danger of prior success for us is complacency," said Bewkes in a conference announcing Time Warner's fourth-quarter financial results.

In the fourth quarter that ended 31 December, AOL's revenue fell by 32 per cent to $1.3 billion. Its number of subscribers continued to shrink, dropping another 740,000 to end the year at 9.3 million.

Google may stand to benefit from the AOL move as it plans to counter Microsoft's $44.6 billion offer for Yahoo. Google has a 5 per cent stake in AOL, and Bewkes did not rule out the prospect of a deeper alliance between Google and AOL's portal business.

The area where an AOL pairing would help Google is editorial content and AOL's ad-network technologies. Working together may help both the companies to place ads more effectively and generate revenue from on sites across the web. AOL would also give Google the instant messaging service, one of the main reasons people use AOL.

Google already provides search capabilities to AOL users. Getting together would let Google more fully partake of the revenue generated by ads placed alongside those search results, which currently are divided between the two.