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AOL Time Warner To Lose Turner, Posts $99 Billion Loss
Turner, the maverick cable TV mogul who founded Turner Broadcasting and CNN before selling out to Time Warner in 1996, said Wednesday he will retain his post until May but wants to focus more on his philanthropy after that.
His exit follows the recently announced departure of Chairman Steve Case, the America Online co-founder who was one of the key architects of the $106 billion merger in 2001 between AOL and Time Warner.
Whether Turner--who owns 3.4 percent of the company and is its largest individual shareholder--will remain on AOL's board will be determined in the next few weeks, spokeswoman Mia Carbonell said.
Turner was not available for comment, she said. But in a statement Turner was optimistic. "The company will be able to move forward and reach its true potential," he said.
AOL Time Warner executives were eager to look forward after announcing a staggering $45.5 billion charge in the fourth quarter to account for the media conglomerate's plunging value. That included a $10 billion charge to reflect the lower value of AOL's cable assets.
Analysts had been expecting AOL to take such a writedown but were surprised by its enormity. It meant that in the three months ending Dec. 31, AOL lost $44.9 billion, or $10.04 per share, compared with a loss of $1.8 billion, or 41 cents per share, in the fourth quarter of 2001.
However, revenue rose 8 percent to $11.4 billion, and AOL said that without the one-time accounting markdown it would have earned 28 cents per share. Analysts surveyed by Thomson First Call had been expecting earnings of 28 cents per share and $11.2 billion in revenue.
The announcements were made after the markets closed Wednesday. AOL stock , which has fallen nearly 80 percent from its highest level after the merger was announced, dropped more than 9 percent in extended-hours trading.
Other than federal accounting investigations, the biggest question over AOL Time Warner remains the performance of the AOL online division. Time Warner's media properties--which include HBO, CNN, Warner Music, Time and People magazines, as well as blockbuster film franchises like 'Harry Potter' and 'Lord of the Rings'--have been the bright spot.
In fact, it took double-digit growth in AOL's cable, TV networks and movie divisions in the fourth quarter to make up for a 6 percent drop in revenue from the online division.
New chief Richard Parsons said he was pleased with the company's overall fourth-quarter performance and pledged to "run each of our businesses as well or better than before, with a continued major focus on stabilizing and revitalizing America Online."
AOL Time Warner this week sold its 8.4 percent stake in Hughes Electronics, the parent company of the DirecTV satellite service, for $800 million as part of a plan to reduce debt to $20 billion by the end of this year.
AOL also plans an initial public offering for its cable division, and analysts have speculated that AOL will sell its book-publishing division and the Atlanta Braves, the baseball team Turner brought to the media empire.
Analyst Craig Nedbalski, managing director at Victory Capital Management, said AOL Time Warner's management team has more focus than in the past. He said the company has a credible plan for improving the performance of the online division. "I'm not as worried about AOL as the rest of the world," he said.
The massive goodwill writedown disclosed Wednesday comes on top of a $54 billion charge AOL took in the first quarter to account for the company's stock decline. That move gave AOL the biggest quarterly loss in U.S. business history.
So for all of 2002, AOL lost a record $98.7 billion, or $22.15 per share, on revenue of $41.1 billion. In 2001, the company lost $4.9 billion, or $1.11 per share, on revenue of $38.5 billion.
Those figures clearly weighed on Turner. In an interview with Mike Wallace to be broadcast on CBS' 60 Minutes II on Tuesday, Turner estimated that he lost between $7 billion and $8 billion from AOL Time Warner's sinking stock.
He also said his vice chairman role was like having "one foot in the door and one on the sidewalk." He called it "a title without portfolio ... like the Emperor of Japan."
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