NEW YORK - When AOL flashed $147 billion in stock puffed up by the dot-com boom, Time Warner, one of the world's biggest media companies, fell into its arms in 2001. They swooned over their combination of Internet access and traditional media.
But before long, reality intruded. Among other problems, AOL's dial-up Internet access business was fading, diminishing whatever benefits there might be in having AOL spread Time Warner content online.
Finally, Time Warner filed for the corporate world's version of a divorce yesterday. It said that it will spin off AOL as a separate company and get on with its life.
Now AOL will try to bounce back with the help of its online advertising business, a challenge that falls to former Google Inc. advertising executive Tim Armstrong, 38, who was hired as AOL chief executive officer in March.
Time Warner owns 95 percent of AOL and will buy out Google's 5 percent stake during the third quarter for an undisclosed amount. From there, AOL and its 7,000 employees will be spun off into a separate publicly traded company.
Meanwhile, Time Warner will focus on movies, cable TV networks such as HBO and CNN, and publishing magazines such as Time, People and Sports Illustrated.