• by January 28, 2004

Media behemoth Time Warner reported earnings today and while the company's cable and film divisions reported a fourth-quarter profit, its online unit posted a seven percent decline in fourth quarter revenue. Time Warner's quarterly revenue increased six percent to $10.9 billion in all sectors except for America Online.

AOL earnings fell 14% to $301 million for the fourth quarter due to subscriber defections and ad revenue declines. Time Warner reported that AOL lost about 400,000 members during the quarter, and 2.2 million for the year. Yikes. Is any of that marketing for AOL 9.0 working? Will AOL's forthcoming Super Bowl ad blitz help it hit a home run? When will it turn the corner?

Time Warner reports that AOL has 24.3 million members in the U.S. as of Dec. 31, 2003 and that U.S. subscription revenues were flat. A year-over-year rise in broadband subscribers was offset by a dip in dial-up members. Ad revenues decreased 40% due to the backlog of prior ad deals AOL continues to burn off.

Once ballyhooed as the engine that would drive a fabulous world of convergent media and e-commerce, America Online has been a drag on its corporate parent for going on two years. The division is trying to correct its course. Surely, there's no shortage of bright minds and tactical troops trying to fix things.

The latest movement in this direction came in the announcement of AOL's ad sales re-org - its latest ad sales re-org. We are eager to see how the latest moves will change the way AOL goes to market, and how advertisers and agencies will perceive them. While it's pre-mature to speculate on their reactions, my guess is that Time Warner and AOL chiefs are counting on Michael J. Kelly, president of AOL's new Networks Sales and Solutions division, and Michael Barrett, the division's executive-VP, sales and partner marketing, to deliver the goods. On your mark, get set, go Mssrs. Kelly and Barrett!