AOL Steals the Limelight

Time Warner (TWX Quote) has tried everything short of giving away a free set of Ginsu knives to lure people to its AOL Internet unit. Now, it's going to see if free content will help.

The largest media company wants to lessen AOL's reliance on its faltering dial-up business so it can focus on gaining more Internet advertising revenue, according to media reports. AOL will have to trim thousands of jobs to acheive this.

Time Warner plans to disclose its new AOL strategy on Wednesday, when it issues second-quarter results. Shares of Time Warner have been weighed down by investors' worries about AOL, which accounts for about 19% of its revenue. This year, Time Warner shares have dropped 7%, while rivals News Corp. (NWS Quote) and Walt Disney(DIS Quote) have both surged about 20%.

"People are worried about it dying a slow, slow death," says Victor Hawley, who manages more than $1 billion in assets for Reed Conner & Birdwell, including shares of Time Warner, referring to AOL. "In a perfect world, if you didn't have to worry about subscription revenue, you would have converted years ago." ...