AOL expects large drop in ad revenue in 2003

By Laura Rohde, IDG News Service

December 3, 2002 12:00 PM ET

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IDG News Service - AOL Time Warner Inc. said today that it expects steep declines next year in advertising and commerce revenue for its Internet division, America Online Inc.
The New York-based media conglomerate forecast flat revenue growth for the division in 2003 compared with the current year, due in large part to declines in advertising and commerce revenue of 40% to 50%, though those losses are expected to be offset somewhat by worldwide growth in Dulles, Va.-based AOL's subscription revenue, according to a statement.
The financial forecast is the curtain-raiser to "AOL Day," during which AOL Time Warner Inc. plans to unveil its new service-bolstering strategy for the ailing AOL to company executives, analysts and the news media today in New York.
Among other things, AOL is expected to announce that it will be the exclusive provider of Web content from Time Inc. publications such as People and Entertainment Weekly and that it is throwing more weight behind its broadband service.
AOL Time Warner reaffirmed its earlier guidance of total revenue of between $8.8 billion and $9 billion for AOL's full fiscal 2002, with advertising and commerce revenue of between $1.5 billion and $1.6 billion, the company said.
The company also said it expects AOL's full-year 2002 earnings before interest, taxes, depreciation and amortization (EBITDA) to be between $1.7 billion and $1.8 billion. For 2003, AOL Time Warner said it expects AOL's EBITDA to decrease 15% to 25% year over year.

Reprinted with permission from

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