AOL Is A Dog With Fleas

The implosion at AOL is accelerating:

[from Bewkes confirms AOL split | News - Digital Media - CNET News.com by Caroline McCarthy]

It’s the first time the executive [Jeff Bewkes] has confirmed that the split [between the Access and Media sides of AOL] will take place soon, though it’s been widely talked about for months since the chief mentioned it speculatively earlier this year. What he hasn’t said yet—and what some are expecting may come soon—is that Time Warner will get rid of AOL altogether, perhaps selling it to a bigger player in the online-advertising market.

It was another tepid quarter for the online-service-turned-media-company, which saw revenues drop 16 percent, to $1.1 billion. Its ad revenues are up 2 percent ($8 million)—though display ad revenues on AOL-owned sites are down—but that business still isn’t big enough to offset the losses from AOL’s sputtering Internet access service.

Once a national mainstay, the provider lost 604,000 subscribers in the second quarter alone and is down 2.8 million from the previous year, leaving it at 8.1 million subscribers. That’s a $200 million loss (29 percent drop) for the company, which had raised fees on the dial-up service in late June.

Operating income at AOL dropped 36 percent, to $230 million.

The death spiral is speeding up. Meanwhile, online advertising on the media side is up, slightly.

Divvy it up, sell the pieces, and get it over with. Time-Warner needs to think about scraping this off their shoes, and taking another run at the Web unencumbered by the crappiness of most of AOL. Start with something small — maybe an acquisition, maybe something built internally — something that works, and build on that.

Paul Kedrosky’s comment this morning was hilarious:

My reaction: AOL still has a f-ing dial-up business? Yeesh.