As AOL's transition to a free service continues to pay dividends for the online service, Time-Warner is beginning to shop for an online-ad company to bolster the transformation.Time-Warner CEO Bob Parsons said AOL is making progress after switching to a free, ad-supported model - and also spoke of AOL's desire to acquire an online advertising company, Reuters writes. "We are looking for horizontal opportunities to strengthen our position in the advertising space," Parsons is quoted as saying at the Credit Suisse media and telecom conference in New York on Tuesday.

Parsons did not point to potential acquisition targets, but he did say, "Almost anything…other than the really big, established portals is within striking distance for us." And he told Reuters in an interview last week that Time Warner is looking at ad insertion technology that lets companies place ads relevant to a particular viewer's tastes.

Parson also made it clear that AOL's U.S. internet access division would not be sold. "I think we've got quite a valuable annuity stream in our access business that I'm not sure some private equity player or some other access provider would pay for," he said. "From Time Warner's perspective, there is still some value that we can get out of the connections to homes for our other businesses."