AOL Time Warner Posts Biggest Loss in History

25 April 2002

AOL Time Warner, it seems, likes to break records. First it became the world’s biggest media company; now it has posted the world’s biggest ever quarterly corporate loss.

The media mammoth has recorded a colossal $54.2 billion (€60.5bn; £37.3bn) shortfall for the first quarter, due almost exclusively to a $54bn write-down connected with the declining value of its America Online internet unit. Excluding this, the deficit stood at $1 million.

Despite the eye-watering losses, AOL TW managed to beat analysts’ expectations for revenues, which rose 4% to $9.8bn, with EBITDA (earnings before interest, tax, depreciation and amortization) up 3% to $2.05bn. Subscription revenues jumped 14% to $4.7bn, though advertising and commerce revenue tumbled 13% to $1.8bn.

America Online had a dismal quarter, with ad sales slumping 31% as internet advertising remained slow. AOL TW does not expect this sector to pick up significantly this year, prompting a cut in its forecast full-year EBITDA growth for 2002 from earlier predictions of 8%–12% to 5%–9%. Revenue growth targets remain the same at 5%–8%.

Elsewhere there was good news, with healthy results for its cable systems (revenues +19%; EBITDA +10%); cable TV (revenues +5%; EBITDA +4%); and publishing (revenues +3%; EBITDA +14%). The group’s film division saw a 3% slide in revenues, but enjoyed a 60% EBITDA surge on the back of the Harry Potter and Lord of the Rings films.

The results also reveal that AOL TW has become one of its biggest advertisers. Intra-company ad revenues on its manifold media properties jumped 85% to $131m, around 7.2% of the group’s total advertising income.

Data sourced from: Financial Times;; additional content by WARC staff