Google Asks Time Warner For Money Back

    February 4, 2009

Roughly three years ago, Google bought a five percent stake in AOL for $1 billion.  AOL then went down the tubes, and more recently, the economy has done the same.  So everyone’s favorite search giant has now put Time Warner into a position where it may have to offer something of a refund. 

Google Logo

The original deal apparently left Google with the option to make Time Warner either take AOL public or buy Google’s stake back at fair market value.  Given the economy’s condition, Time Warner can’t go that first route.  Even red-hot companies like Facebook aren’t trying their luck right now.

That seems to leave the second alternative, and Time Warner wouldn’t actually have to shell out anything near $1 billion.  Peter Kafka explains, "Last month, Google announced that it had written down more $726 million of its AOL investment, so if it did get a check, it’d be worth $250 million."

Keep an eye out for a big exchange, then.  Or it’s possible that Google is just be trying to make Time Warner play ball in some other way.  Kafka wonders if "[w]hat Google really wants is an extension of its paid-search deal with AOL-which is what the company’s $1 billion really got it back when it did the initial deal.  Or perhaps more intriguingly: An amendment to the change of control clause in the old deal, so that Google would continue to keep the AOL search business if, say, Time Warner sold the company to Yahoo or another bidder."

This is interesting stuff.  It’s also, perhaps, a sign that Time Warner’s lawyers need to do a better job of reading the fine print.