The Dick Parsons Project

30 January 2003

But if, as rumoured, AOLTW wants to float its cable division soon, it may discover it is still overvaluing some of its assets. The media conglomerate’s $100bn goodwill writedown has broken records for a corporate loss.

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AOLTime Warner has posted a record corporate loss of $98.7bn for the year to 31 December 2002. Although revenues rose 7% over the year, and ebitda rose 5%, an underlying operating profit of about $6.1bn was wiped out by huge writedowns of goodwill. An initial charge to goodwill of $54.2bn taken in the first quarter of the year to reflect the introduction of new accounting standards, was augmented by a further $45.5bn charge taken in the last quarter. The fourthquarter writedown reduced the book value of the AOL, cable, and music divisions.

In a series of shakeups, both the Chairman, Steve Case, and the deputy Chairman, Ted Turner, have resigned from their offices, although they are remaining on the company's board.

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