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10-Q Watch: Time Warner Tells Google Will Buy Back Its 5 Percent AOL Stake

This story was written by Staci D. Kramer.
Updated: Time Warner, which is in the process of deciding whether or not to spin off AOL,  has told Google (NSDQ: GOOG) it will buy back the 5 percent of AOL the search company acquired in 2006. Next step: a fair-market appraisal of the value. From the 10-Q filed this morning:

"In late January 2009, Google exercised its right to request that AOL register Google's 5% equity interest for sale in an initial public offering. Time Warner has the right, but not the obligation, to purchase Google's equity interest for cash or shares of Time Warner common stock based on the appraised fair market value of the equity interest in lieu of conducting an initial public offering. The Company is in discussions with Google and has notified Google of its intention to purchase the 5% equity interest."

But it's not as simple as that. Time Warner CFO John Martin mentioned the move during today's earnings call, describing the response as "moving down a path that could result" in acquiring the stake. he said the company is still in discussions with Google about various possibilities. He also saidin an almost offhand waythat "it's not a material amount of money one way or the other, not a huge material event." Which really says it allAOL isn't worth the trouble it makes for Time Warner (NYSE: TWX). Today's call was a good example, with far more attention being paid to AOL than TW's pure content businesses.

More on a possible spin from the 10-Q: "During 2008, the Company announced that it had begun separating the AOL Access Services and Global Web Services businesses, as a means of enhancing the operational focus and strategic options available for each of these businesses. The Company continues to
review its strategic alternatives with respect to AOL. Although the Company's Board of Directors has not made any decision, the Company currently anticipates that it would initiate a process to spin off one or more parts of the businesses of AOL to Time Warner's stockholders, in one or a series of transactions. Based on the results of the Company's review, future market conditions or the availability of more favorable strategic opportunities that may arise before a transaction is completed, the Company may decide to pursue an alternative other than a spin-off with respect to either or both of AOL's businesses."


By Staci D. Kramer