Mountain View, California-based Internet giant Google has asked Time Warner Inc. to either buy back the 5  percent stake in Time Warner's AOL that Google bought for $1 billion in 2006, or to spin off the ailing property and take it public, Time Warner executives said Wednesday. Google acknowledge the request in a statement while Time Warner said that it was considering its options in the matter. Last week Time Warner announced that it will cut 10 percent of its workforce, or as many as 700 jobs, from Internet services group AOL, in order to help curtail losses brought about by a weakened online advertising market. Once $20 Billion Stake Now Seen Valued At $5.5 Billion In an August 2008 report filed with the United States Securities and Exchange Commission Google signaled that the 5 percent stake in AOL might be worth considerably less than it originally paid. Google purchase of the sizable stake three years ago suggested that AOL had a value of some $20 billion at the time, however during the years since the purchase AOL has struggled with declining subscriber numbers and advertising revenue. In January Google wrote down the value of its AOL stake by $726 million to $274 million, placing a much more modest $5.5 billion valuation on the one-time ISP giant, a far cry from the early days of Google's investment when AOL brought in 9 percent of its revenue. In a letter sent to Time Warner last week Google invoked an escape clause to exit or drastically change its stake in AOL, which has seen a 20 percent falloff in advertising sales during the first quarter. "We are reviewing the request," Time Warner chief financial officer John Martin said, according to a recent report on the Dow Jones-owned All Things Digital Web site. "But we have several options, including proceeding with the request, delaying a decision for some time or buying back Google’s stake at an appraised value, which would obviously be well below the original amount," Martin added. Google Seeks An Escape From Its Investment In AOL Google said that the time was right to exercise the "demand registration rights" it held regarding its stake in AOL. "After careful consideration, we made the decision that we needed to exercise our rights now so we could be in a position to sell our interest when the timing made sense for us," Google said in a statement. "AOL remains an extremely valued partner, and we’ll continue to work closely together to provide their users with the best search experience possible," the search leader added. In a Wednesday conference call with investors Martin said Time Warner was exploring its options in the matter. Google and Time Warner have had a partnership agreement for seven years, including a search deal that runs through 2011 that is expected to remain in place. AOL has seen its share of the search engine market fall, with a December report from Nielson Online noting the company to hold a 4.1 percent share for the month. Some industry analysts considered Google's move as a possible attempt to force Time Warner into a longer and more favorable AOL search deal with Google, even if AOL is eventually sold to a rival such as Microsoft or Yahoo. Time Warner has held talks with Yahoo regarding a merger with AOL for more than a year. During the fourth quarter online advertising revenue at Google increased by nearly 16 percent, while during the same period AOL saw its revenue fall by 18 percent. Related Links:
| 
