Will Freedom Help AOL?

More rumors about AOL being spun out from Time-Warner, which sounds like a good idea on both sides:

[from Time Warner May Split Off Cable, AOL Units, Pali Says.

[…]

What Time Warner decides to do with cable and AOL might also be decided by Jeff Bewkes, who may be planning to simplify the company, Greenfield said. Bewkes was effectively named heir apparent after being promoted to president by Chief Executive Officer Richard Parsons in January. Parsons, whose contract expires in May 2008, said last month he will decide over the next year or two when to step down.

Even though Time Warner Cable is a separate public company, the fact that it’s 86 percent-owned by Time Warner prevents it from focusing on businesses that would compete with its parent, such as a major Internet portal strategy or national cable networks, Greenfield said.

AOL is also faltering, as its target audience will continue to shrink and it hasn’t offered innovative new products, Greenfield said.

Parsons, in an interview last week, said it will take two more quarters for AOL to turn around, as its user base is going up for the first time in five years.

I think Parsons is smoking something. It will take more than a few quarters for AOL. The company hasn’t done anything innovative for a long, long time. But spinning it out, and letting the company find its own way — especially dropping older, tired products that have dwindling user communities — is a good idea.