AOL Time Warner revealed Wednesday it had disinterred yet more advertising deals wrongly accounted for by America Online.
In the three months prior to AOL’s inking its $106 billion merger with Time Warner in 2000, revenues were improperly inflated by nearly $200 million (€205.17m; £129.29m) and profits by almost $100m. At the time, AOL and Time Warner were anxious to convince investors they were unaffected by the emerging slowdown in online advertising.
The restatement will force the media giant to lower AOL advertising revenue by $190m and EBITDA (earnings before interest, tax depreciation and amortization) by $97m over a two-year period.
AOL’s online advertising practices are currently being probed both by the Securities and Exchange Commission and the Department of Justice. The investigations follow AOL TW’s discovery of accounting errors during an internal audit in August. At that time, it was thought to amount to ‘only’ $49m.
AOL TW chief executive Richard Parsons said the internal review of AOL’s accounts will continue, although he believes it unlikely that further revenue improprieties will come to light.
“Even though the total amount of the restatement represents a small portion of America Online’s total revenues during the period, we have taken – and do take – this matter very seriously,” he said.
Data sourced from: Financial Times; additional content by WARC staff