Based on Time Warner CEO Dick Parsons comments at Goldman’s conference, we can do some simple maths and conclude that AOL’s portal business is worth about $20 billion.
Parsons said AOL’s access business, which it plans to sell in 12-18 months, generates the majority of the company’s profit. If we assume this means that the advertising business generates just under 50% of the profits (could be significantly less), this suggests the portal generates about $2 billion in annual revenue and just under $1 billion in EBITDA. Applying an EBITDA multiple of, say, 20x, we estimate that the portal business is worth about $20 billion.
*UPDATE: In the original post, we estimated $20 billion. After getting additional information suggesting that AOL’s media business is far less profitable than we thought, we revised this estimate to $10-$15 billion, with a bias toward the lower end of that range.