Time Warner released it second quarter results today, and the numbers aren’t good. Overall, revenue was down 9% versus the year-ago period as poor results from the publishing, film and yes, AOL dragged down the numbers for all. CEO Jeff Bewkes remarks are telling:
At the same time, we’re continuing the reshaping of Time Warner that we started last year. We’re on track to spin off AOL to our stockholders around the end of the year. Separating AOL will benefit both companies – enabling Time Warner to concentrate fully on our core content businesses and improving AOL’s operational and strategic flexibility.
That’s three AOL mentions in three sentences. Clearly, Time Warner is happy to let everyone know that it will only have a couple more quarters of dealing with that division’s nosedive.
How bad was AOL this quarter? Revenues dropped 24%, to $804 million, versus the year-ago period. The service saw a 21% decrease in advertising revenues, attributable to both display and search ads on its own sites, as well as on third-party sites using its platform.
And the loss of dial-up subscribers continues to hurt the company. It lost over a half million in this past quarter, and some 2.3 million from the year-ago period. Revenues from subscriptions declined 27% from the year-ago period.
In preparation for the AOL spin-off, Google recently sold back its 5% stake in the company, at a $700 million discount from its initial $1 billion investment. However, thanks to the search deal over these past several years, it looks as if Google was much closer to break-even on the deal.
And while AOL’s numbers were awful, Time Warner’s print and film divisions hardly fared better. The print division headed up by Time, saw a 26% decrease in ad revenue from the year-ago period, and an 18% decrease in subscription revenue.
Meanwhile, the film division was hurt by the slide in DVD sales. While movies like The Hangover exceeded expectations at the box office, those profits were wiped out by DVD numbers being down across the board.
Highlighting The Hangover in the results is interesting. One could say Time Warner’s experience with AOL these past several years after the $164 billion mega (or perhaps “drunken”) merger in 2001 (remember, it was AOL that actually bought Time Warner at the time), has been similar to The Hangover. Based on the repurchasing price Time Warner paid for Google’s AOL stock, AOL is now worth less than $6 billion.
AOL serves no purpose on today’s web. Sometimes a brand just needs to die. This is one of those times, now just kill it with what’s left of it’s dignity intact.
When the AOL-Time Warner merger was announced in 2000, I remember everyone involved in that deal was being hailed as a genius.
Could those geniuses please stand up and apologize for what may have been the stupidest business transaction in the history of humankind?
Thank you.
+5
I thought Ebay buying Skype was the stupidest business transaction in the history of humankind?
both of these were of equal levels!
Yes, stupid, but they said the same thing about Ebay’s PayPal acquisition too.
Aged
Old
Lame
AOL is actually doing some innovative things, especially in the automotive category. They were the first to use Vast.com’s revolutionary used car inventory system (which Kelley Blue Book is now copying), and they have been taking share from the other big players. So don’t write them off entirely – especially since T. Armstrong is now at the helm…
The new stuff is having the life sucked out of it by the old stuff. They won’t learn until they’re good and out of business.
Hilarious accompanying pic.
Can you spell it out for us?
Bad analogy. In the movie, (spoiler alert) the guy actually dumps his girlfriend and goes back to the girl he married in Vegas while on his drunken rampage, while it looks like Time Warner want their marriage well and truly annulled.
Good point now how funny would it be if in 5-10 years Time Warner goes back to Aol.
This better not end up like Viacom and CBS where one buys the other then they split years later buys the other back and splits again
Or how about the AT&T, AT&T Wireless split, McCaw acquisition, AT&T rebranding, Cingular thing now AT&T again?
How ominous for Yahoo, right on the day it became the next AOL.
So true.
Were the second quarter results prefaced with “You’ve got FAIL”?
So is that bad news or good news for MapQuest and the (web space) usage of free online Web mapping services that are now owned by AOL? Cheers to the latter.
The real question is, with this kind of performance how viable is AOL as an independent company? What’d be the outlook if it was independent today?
Sure the company still has some assets and revenue, but the trends are not particularly encouraging. Without some positive momentum in the near term, it’s really looking like AOL’s going to be acquired in whole or pieces in the not-too-distant future.
my english may be wrong but “a $700 million discount from its initial $1 billion investment” — aint that a $300 million discount from $1B (to get that $700M), not “a $700M discount”.
We lost Doug.
You saw all of these companies flourish in better times and now when they need every bit of support, you can think of nothing better to do with your time than run them down. Just Wait, the economy may be in slow mode now and when it recovers, for all of you who have left your signatures bare for all to see will have nothing but dust to drink? Be supportive, these companies are here for the long term.
AOL still makes more money than 50000 other online businesses. While it may sound hip to bash the likes of AOL at the drop of a hat – it is commendable that a business that survives on ad rev is still making it through in the tough market conditions.
Show me one online media co that is doing better. (no, Google makes much less money from online content).
In today’s blog i mention how things on the web have not been this crazy since the “You’ve got mail” days. Today’s craziness has turned the PR biz upside down. Knowing how to tweet doesn’t make you a PR guru Telling your customers to start a Twitter account isn’t enough! http://budurl.c.../RelationshipPR
Hangover is a damn good movie:)
testing again. sorry guys
In today’s blog i mention how things on the web have not been this crazy since the “You’ve got mail” days. Today’s craziness has turned the PR biz upside down. Knowing how to tweet doesn’t make you a PR guru
Great move Chris. I’ve been using Disqus for a long time now and it only gets better with time. Daniel Ha and crew keep adding more social goodness to it like Friendfeed and twitter integration plus much much more.
I love that I don’t even have to login now to comment on here which only encourages people to comment more often. Yea, I know it doesn’t take long to enter a name, password and webs