AOL Time Warner profits, despite blocking pop-up ads

By Matt Whipp

Posted on 24 Apr 2003 at 16:05

AOL Time Warner has reported its first-quarter results, showing a profit despite a 42 per cent decrease in online advertising revenue.

Headline figures showed net incomes of $396m, or 9 cents a share. This compares with 2002's staggering $54bn loss for the corresponding quarter.

Revenues for the quarter increased 6 per cent over the same period in 2002 to $10bn. Subscription
revenues climbed 10 per cent to $4.9bn, pushed by cable as well as Net subscribers shifting to broadband.

Content revenues rose 11 per cent to $3.3bn, due to increases in film and television divisions. This also helped push EBITDA (earnings before interest, tax, depreciation and amortization) to $2bn, up 14 per cent. This was also aided by a decrease in restructuring charges that were quartered to $24m.

Subscribers to AOL decreased on consecutive quarters by 289,000 to 26.2m in the US, and by 63,000 in Europe to 6.3m, although both showed increases year on year.

Advertising revenues declined 42 per cent, due to a number of prior-period contract sales having run their term. Other revenues declined 61 per cent, due mainly to AOL's pop-up blocking strategy.

Net debt amounted to $26.3 billion, compared with $25.8 billion at the end of 2002 and was the new priority of CEO Dick Parsons.

'During this quarter, we continued to make solid progress on our other key priorities. We completed the TWE (Time Warner Entertainment) restructuring that both simplifies our Company's structure and maximizes its operating flexibility. We also made progress on our debt reduction program by selling our investment in GM Hughes and by using our substantial Free Cash Flow generated in the quarter to pay down debt. And, just yesterday, we announced the sale of our 50 per cent stake in Comedy Central for $1.2 billion, demonstrating our commitment to meet our overall debt reduction goals,' he said.

He confirmed that the company is on track to meet its guidance, which had been set at a revenues growth in the mid-single digits', the previous quarter.