American Online Reports Ad Revenue Slide

NEW YORK AOL Time Warner on Wednesday reported that revenue for its American Online Internet unit totaled $2.2 billion for the first quarter, down 4 percent from the year-ago quarter.

Meanwhile, ebitda (earnings before interest, taxes, depreciation and amortization) for the Dulles, Va.-based online division climbed 18 percent to $404 million and operating income grew 11 percent to $194 million in the quarter. The company attributed the rise in America Online’s ebitda to the decline in restructuring charges. America Online recorded restructuring charges of $4 million in Q1, versus $75 million during the same period a year ago. Excluding onetime charges, ebitda fell 2 percent.

Advertising revenue slid 42 percent, reflecting a reduction in the benefits from prior period contract sales of $178 million, the company said. Other revenue plummeted 61 percent, due primarily to AOL cutting back significantly on pop-up promotions.

As of March 31, the AOL service had 26.2 million U.S. members and 6.3 million European subscribers, down 289,000 and 63,000, respectively, from the end of Q4 2002. AOL hopes to reverse the decline through its broadband service, which launched at the end of the quarter.

AOL Time Warner’s overall first-quarter revenue increased 6 percent over the same period in 2002 to $10 billion. The New York-based media giant said ebitda rose 14 percent to $2 billion, led by growth at the filmed entertainment, networks and cable divisions, as well as a decrease in restructuring charges from $107 million in the year-ago quarter to $24 million this quarter. Its net income was $396 million, or 9 cents a share, versus a net loss of $54.2 billion, or $12.25 a share, in the period last year.

AOL Time Warner stock [AOL] closed on the New York Stock Exchange Thursday at $13.80, down 20 cents or 1.43 percent. Its 52-week high is $20.70 and 52-week low is $8.70.