“We’re putting across the bottom of the screen right now, Time Warner is making it official. It’s going to be spinning off that structural separation of AOL. This is something the company had talked about last month…Time Warner is now saying that AOL will trade as a separate company. Time Warner owning 95% of that. Google still owns 5% of AOL before the spinoff. That is helping shares of Time Warner by a little bit. You’re talking about a bid of $23.31 and an ask of $23.49. After the stock closed at $23, this is something the investment community had been expecting now it is official.” Squawk Box 5/28/2009

There has been speculation that this move could be coming from Time Warner (TWX) for some time now, and this morning they made it official AOL will be spun out of AOL/Time Warner.  Interestingly, it was AOL that acquired Time Warner back before the dotcom bubble burst. 

However, the internet behemoth has struggled to fit into the much more mature internet industry, especially since the web portal’s revenue is driven by the struggling ad market.  AOL still reaches some 107 million domestic unique visitors a month, according to the Wall Street Journal. 

It will be interesting to see what the market’s valuation for this advertising base will be, but certainly so much will be determined by what the advertising market looks like towards the end of the year when the deal is scheduled to be completed.

Time Warner has committed in recent years to shed segments of the business that are not essential to the company’s long term goals.  Time Warner spun out its cable division to create Time Warner Cable (TWC) in a deal that was completed in early 2007.  The stated goal being to focus on Time Warner’s television, film and other content creation businesses. 

The relatively new CEO of Time Warner, Jeff Bewkes, is clearly trying to get the company to streamline its focus in order to stop the destruction of market value over the last 2 years.  The stock is getting a slight boost this morning from the announcement, which is a relief to TWX since they have largely been left out of the nearly 3 month rally prior to today. 

Squawk Box Announces AOL Spinoff