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Google calls in chips in AOL investment

Time Warner announces that Google is calling for payback on its 5 percent stake in the media giant's AOL unit.

Google is calling in its chips in its $1 billion investment in Time Warner's AOL.

The search giant, which struck the hefty deal back in 2005, gave it a 5 percent stake in AOL.

The 2005 arrangement, not only included collaboration on advertising, instant messaging and video, but also gave Google "certain customary minority shareholder rights," such as those related to any future sale or public offering of AOL.

With the markets in the doldrums and AOL's business continuing to take a beating, as evidenced in Time Warner's fourth-quarter earnings report Wednesday, Google is looking for payback time.

Last summer, Google announced it was considering writing down some of the value it had previously placed on its AOL investment. And when Google reported its fourth-quarter results late last month, the write-down figure came in at $726 million.

And last week, things apparently between the two companies seemed to get worse when Time Warner Chief Financial Officer John Martin said 28 minutes and 13 seconds into the company's fourth-quarter Webcast conference call:

At the end of last week, Google sent us a request to exercise their demand registration rights that it has for its 5 percent ownership stake in AOL.

We're reviewing what we received and we're evaluating our options. Those options include: preceding with the request, delaying the decision for sometime, or we can move ahead to potentially buy back Google's stake at an appraised value, which would obviously be well below the value that was placed on at the time of the original investment.

In other words, stay tuned for more to come...