Turner Quits as AOL TW Posts Largest Ever Quarterly Loss

30 January 2003

A massive balance sheet writedown of $49.1 billion (€45.49bn; £29.88bn) plunged ailing media giant AOL Time Warner into the largest loss ever seen in corporate America. Although most of this sum is specific to its America Online internet business, $10.6bn of the goodwill writedown related to the group’s cable division, and $4bn charge has been taken against its film-making business.

The writedown and other adjustments leave the company with a 2002 full-year shortfall of $98.7bn, news of which coincided with the surprise announcement that vice-chairman Ted Turner will resign at the group’s annual general meeting in May.

Turner, also AOL TW’s largest individual shareholder, is reportedly quitting to focus on his “philanthropic interests” [among which aid to impoverished AOL investors is not thought to figure].

The principal perpetrator of this eyewatering loss is America Online, whose imaginative treatment of revenues precipitated the present crisis.

Elsewhere in the group, however, the traditional media businesses engaged successfully in the old-fashioned pursuit of profit and EBITDA (earnings before interest, tax depreciation and amortization) hit double digit growth. Even including the AOL millstone, overall EBITDA rose by sixteen percent in last year’s final quarter.

Cashflow, it seems, has not been affected by the writedowns or adjustments. According to Richard H Parsons, ceo and chairman-designate, this will be used “with other initiatives to reduce debt on our way to obtaining meaningful strategic capacity”.

The group’s debt burden currently stands at $26bn.

Data sourced from: Multiple origins; additional content by WARC staff