Time Warner keeps faith with AOL

Time Warner has said it remains committed to America Online following reports that it could spin off the Internet firm or sell a stake in it. Richard Parsons, Time Warner chairman, said he was determined to increase AOL's value which, in turn, would boost the US media giant's share price. Time Warner is facing investor pressure - led by Carl Icahn - to overhaul its cable TV and Internet assets. Recent reports have claimed it may sell a stake in AOL to Microsoft. Investor unrest Time Warner merged with AOL, the world's largest Internet service provider, in 2000 in what was the world's largest media deal. However, investors led by corporate raider Carl Icahn have been unimpressed by Time Warner's recent performance and have called on the firm to buy back shares worth $20bn (£11bn). They believe that Time Warner's share price is being depressed by its ownership of AOL and its cable TV assets. Mr Parsons said AOL was "undervalued" and he believed that plans to transform the business from a subscriber-based service to an advertising-funded one would boost its value. "The real driver of enhanced valuation is going to be AOL in the near term and the long term," he told a conference in New York. Mr Parsons would not comment on speculation about potential co-operation between Time Warner and Microsoft, saying that his company talked to all of its competitors. Strategic importance He added that he could envisage Time Warner reducing its stake in its cable TV business, Time Warner Cable. The group is currently planning to sell off about 16% of the business which offers digital telephony and high-speed Internet access. Ownership of distribution assets was crucial to the future of its Warner Brothers film studio and TV networks including CNN and HBO, he added. "Right now I believe cable is still a strategically important asset for us. "I do not think this is time to cast it off. Could that change over time? We'll see."

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