Time Warner has hired Citigroup to find a partner for AOL Europe. And it could even ultimately lead to a sale or merger of the unit. It also makes me wonder whether Time Warner may be cleaning up AOL for a full demerger of the Internet unit.
AOL Europe has always struggled and since it demerged from a joint venture with Bertlesmann has gone nowhere. AOL Europe had 5.9 million subscribers across the UK, Germany and France as of March 31, down 452,000 compared with the year-earlier quarter.
And each of these countries have powerful incumbant telecom operators with near monopoly ISP operations - particularly France Telecom and Deutsche Telekom. AOL Europe should probably look at spinning their dial-up ISP customers off to a leading ISP such as Orange or Tiscali and then focus exclusively on the free AOL portal.
Take it a step further and Time Warner should consider selling or merging the free AOL portal with Google or MSN. They may be a lot better off having a minority stake in one of the Internet leaders than owning 100% of a stand alone AOL without significant resources or scale.
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