US media giant Time Warner says its board has approved plans to spin off its AOL internet division as a separate company by the end of this year. Time Warner will buy the 5% of AOL it does not already own from Google, then offer the firm to its own shareholders.

AOL bought Time Warner in a $147bn (£92bn) deal that has come to symbolize the excesses of the dot com boom. AOL and Time Warner combined in 2001 in what has become one of the least successful mergers in history.

Time Warner said last month it was planning to spin off some or all of AOL as internet advertising slumped. In March, former Google advertising executive Tim Armstrong was recruited to head AOL with the possibility of leading a separation.

Google is among the companies that has grown to dominate online advertising at the expense of the once powerful AOL.