AOL Time Warner reports third quarter loss

The Internet and media group AOL Time Warner has reported losses for the third quarter, despite revenue and subscription gains.

The Internet and media group AOL Time Warner has reported losses for the third quarter, despite revenue and subscription gains.

AOL Time Warner posted a net loss of $996m (£689m) for the quarter ended 30 September 2001, compared to a pro forma net loss of $902m (£624m) in the third quarter in 2000. The group's total revenue rose 6% to $9.3bn (£6.4m).

This quarter's loss includes an investment charge of $196m (£136m), and $134m in merger-related expenses.

The company reported that cash earnings were stronger, thanks to growing subscriber revenue for its America Online (AOL) Internet division.

Earnings before interest, taxes, depreciation and amortisation surged 20% to $2.5bn (£1.7bn), or $0.30 a share, which exceeded analysts' predictions of $0.26 a share.

AOL Time Warner chief financial officer and executive vice-president, Michael Kelly said: "We are very pleased with this quarter's operating results, as well as our financial results."

The company's strong revenue figures, achieved despite a worldwide advertising glut, were spurred by subscription growth in the Internet and cable divisions, Kelly said. The company's AOL Internet service added 1.3 million new subscribers in the third quarter, increasing the service's total worldwide subscriber base to 31.3 million.

"AOL subscriber growth is accelerating," the company's chief executive officer and director, Gerald Levin said. "We clearly have momentum, especially in AOL's international subscriptions."

AOL also experienced an increase in advertising revenue, which grew 7% from the year-ago quarter.

"The flagship service is still the place where advertisers want to be when they are on the Web," Kelly said.

The Internet service is expected to continue to post strong growth in the fourth quarter, bolstered by the recent release of AOL 7.0 on 16 October, and the upcoming launch of the music subscription service MusicNet, Levin said.

The long-awaited MusicNet service, a joint venture between AOL Time Warner, Bertelsmann, EMI Group and RealNetworks, is due to launch in November through the AOL Music Channel, Levin added.

Despite the company's success in its Internet division, executives emphasised that the worldwide ad market continues to remain weak, and would affect the company across its diverse media holdings.

The company also claimed that results had been affected by the amount of advertising-free news coverage the company dedicated to covering the terrorist attacks on the US through its CNN news channel.

Levin said that he expects that the company will meet targeted revenue increases for the fourth quarter, with an expected boost from holiday marketing revenues.

AOL Time Warner shares fell 5.52% to $31.65, following the release of the company's third-quarter results.

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