Time Warner's AOL `Nightmare' May Worsen on Slowdown

Time Warner's AOL `Nightmare' May Worsen on Slowdown (Update3) 

By Gillian Wee and Tim Mullaney

July 21 (Bloomberg) -- Time Warner Inc.'s struggle to sell AOL is putting more pressure on the media company's stock price as an advertising slowdown spreads to the Internet and the pool of potential buyers shrinks.

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Time Warner, the world's biggest media company, has fallen 13 percent this year in New York Stock Exchange trading on investor concern about the economy and the outlook for advertising. That adds to an almost 70 percent slide since AOL bought Time Warner for $124 billion in a 2001 takeover that sparked $100 billion in writedowns and shareholder lawsuits.

The value of AOL's ad unit, along with its declining dial- up Internet-access division, has dropped to less than $10 billion from around $15 billion two years ago and will fall further, said Richard Greenfield, an analyst at Pali Capital in New York...

No Takers

His assessment differs from that of Morgan Stanley analyst Benjamin Swinburne, who said last week that the market's $10 billion valuation of AOL's ad business may be too high and isn't reflected in the share price. Getting more than $3 billion to $4 billion for the unit would bolster the shares, New York-based Swinburne said in a July 17 note.

Philippe Krakowsky, an executive vice president for strategy at ad company Interpublic Group of Cos.; Lance Maerov, a senior vice president at WPP Group Plc; and Rich Stalzer, president of IAC/InterActiveCorp.'s advertising solutions group, said they aren't interested in buying AOL's ad businesses...