Bewkes promises AOL decision 'fairly soon'

Time Warner will decide the future of its AOL online division "fairly soon", its chief executive told investors yesterday, as he signalled a long-awaited resolution to the problem.

For much of this year, Microsoft, Yahoo and AOL have held talks to try to secure their position on the internet and compete better with Google, which dominates the internet search advertising market.

One scenario, sources have said, included a merger of Yahoo and AOL, with Time Warner holding a stake. But no new information has emerged since a burst of activity between Time Warner and Yahoo just a few weeks before Yahoo's August annual shareholders' meeting.

Jeffrey Bewkes, Time Warner chief executive, told shareholders at a Goldman Sachs media industry conference in New York yesterday: "All of the players, including us, are exploring what kind of scale combination would improve the operating and strategic positioning of AOL and other internet players.

"That probably will get decided fairly soon."

Mr Bewkes did not provide much more detail on the discussions between the company and potential suitors.

Resolving the future of AOL, which has dragged down Time Warner's share price since AOL's purchase of Time Warner in 2001, will help one of the world's largest media conglomerates concentrate on its content business.

Mr Bewkes said earlier this month that this had become Time Warner's top goal. Focusing on content would help it weather the storm that has ravaged the financial sector, but has not yet significantly hurt media groups.

Mr Bewkes said: "The economy is the biggest strategic question in everyone's mind.

"It certainly has been a big question on media valuations. But it hasn't had as big of an effect on Time Warner."

US and European media executives fear the financial sector troubles will spill over to advertising spending as weaker consumer confidence hits big advertisers' marketing budgets.

Traditional media companies also now have to compete with myriad smaller producers of videos and shows distributed on the internet - even though much niche content has yet to prove profitable.

Mr Bewkes said: "I remember the old 80-20 rule, where 80 per cent of the money was coming from 20 per cent of the activity.

"Well, now it's going to be more like 90-10, where more of the money is going to an world ever more accessible to giant brands and hits."

By Kenneth Li

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