AOL Time Warner reported a $54.2 billion first-quarter loss, the biggest quarterly corporate loss in history and one tied mostly to a massive but expected writedown of the value of America Online.
First-quarter revenue grew 4% to $9.8 billion. The loss per share of $12.25 approached the company's depressed share price of $19.30 a share.
AOL Time Warner in January announced it would take a $54 billion writedown to reflect the declining value of ailing America Online since AOL's January 2001 acquisition of Time Warner. Excluding that writedown, AOL Time Warner said it lost $1 million.
Advertising and commerce revenue dropped 13% to $1.8 billion for the quarter, led by dismal performance within the AOL unit, where advertising and commerce revenues dropped 31%. The parent company's subscription revenue grew 14% to $4.7 billion.
In publishing, the story was a bit brighter. Reported EBITDA grew 28.3% and revenue 16.4% for the quarter, thanks to increases in advertising and commerce revenue and the acquisition of IPC Media. Cable also showed good results, with EBITDA up 10% and revenues up 19% due to increased digital subscriptions, higher cable rates and a 12% increase in general advertising sales.
The company's filmed entertainment unit showed a 60% increase in EBITDA despite a 3% revenue decline, due to several blockbuster movies including Harry Potter and the Sorcerer's Stone and Lord of the Rings: The Fellowship of the Ring.
AOL Time Warner continues to be a heavy advertiser on its media: Intracompany advertising/commerce revenue in the first quarter jumped 85% to $131 million, equivalent to 7.2% of AOL Time Warner's ad/commerce revenue. Divisions report that revenue in their figures, though the company factors it out from the AOL Time Warner total reported revenue.
Recent management shakeups within AOL Time Warner have also made investors uneasy. The first in a series of changes occurred April 9 when Barry Schuler, CEO of AOL, stepped aside to run a new digital technology unit within AOL. Bob Pittman, AOL Time Warner COO-elect, now manages AOL operations as well. And this week, Robert Friedman, president of worldwide interactive marketing for AOL, was tapped by corporate as senior vice president of corporate marketing in charge of integrated marketing and promotions across AOL Time Warner units, a newly created position.
Robert Sherman, former president of Time Warner Cable ad sales, is now running ad sales for AOL as president-interactive marketing, essentially Mr. Friedman's old job. Jimmy de Castro is new on the job as president of AOL Interactive Services. More changes are expected.