Time Warner Earnings Reflect Slight Improvement For AOL Division
The first quarter revealed some improvement for Time Warner's troubled America Online unit, as the division reported a 21 percent increase in operating income before depreciation and amortization on flat revenues. Growth in AOL's subscription revenues was offset by declines in advertising and other revenues, Time Warner reported. Subscription revenues rose 1 percent to $21 million, attributed to positive foreign currency exchange rates at AOL Europe and growth in the AOL for Broadband service.
Ad revenues decreased by 5 percent to $12 million as a result of the lowering in intercompany revenues and lower revenues from prior-period commitments. Those decreases were offset, in part, by increased revenues from paid search ($27 million).
In its earnings call, Time Warner reported that the AOL service had 24 million members in the United States as of March 31. AOL lost 237,000 subscribers during the quarter, many of whom leave for cut-rate Internet services, or for Digital Subscriber Line service via telcos and other providers of broadband Internet service.
AOL's quarterly subscriber loss represents a decrease of 361,000 billed subscribers that was partially offset by 124,000 members lured to AOL through trial and retention programs. Meanwhile, Time Warner said that the AOL service in Europe had 6.4 million members as of March 31, for an increase of 38,000 for the quarter.
Time Warner is reportedly undecided as to whether it wants to keep the AOL division. The company can't take any action until a settlement is reached with the Securities and Exchange Commission over allegations of improper accounting at AOL. A settlement is believed to be looming, and could be outlined in a matter of weeks, according to company insiders.