AOL Again Under the Grill – This Time Over Oxygen Ad Deal

07 October 2002

America’s Securities & Exchange Commission has launched another inquiry into ad sales accounting practices at AOL Time Warner – especially within its troubled interactive subsidiary America Online.

The latest probe will investigate whether the ads-for-investment deal reached by AOL with female-focused cable channel Oxygen Media resulted in the double booking of revenues by more than one AOL division.

The agreement, inked in April 2001, committed Oxygen to spend more than $100 million (€102.14m; £63.91m) on online ads with AOL; in return AOL installed the channel onto its systems without the usual launch fee.

Although such contra-deals are neither unusual nor illegal, the investigation is concerned that the ad revenues may have been credited twice over – once to AOL and again to sibling Time Warner Cable. A practice which if true raises some very awkward questions over a plethora similar contra deals within the media giant.

An AOL spokesperson claimed the accounting for the Oxygen deal was “appropriate”, while Oxygen declined to comment.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff