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The Honolulu Advertiser
Posted on: Tuesday, March 26, 2002

AOL to take record $54 billion writedown

By Kim Chipman
Bloomberg News

NEW YORK — AOL Time Warner Inc. will take a record writedown of $54 billion in the first quarter to account for a decline in market value since the biggest media and Internet company was formed last year.

New York-based AOL Time Warner has seen its share price fall 49 percent since it bought Time Warner in 2001.

Bloomberg News Service

The writedown reduces the value of goodwill, or the difference between the purchase price of an asset and its book value, created when America Online Inc. bought Time Warner for $124 billion in January 2001. AOL Time Warner disclosed the figure in a U.S. regulatory filing.

Shares of the New York-based company, owner of the America Online Internet service and HBO pay-television network, have dropped 49 percent since the purchase, after the company cut its financial forecasts twice amid an advertising slump and slowing Internet growth.

AOL Time Warner had said in January the charge would be $40 billion to $60 billion.

The writedown will top JDS Uniphase Corp.'s $50.1 billion cost of goodwill for fiscal 2001 that ended in June.

Shares of AOL Time Warner slipped 29 cents to $24.21 and have declined 25 percent so far this year.

AOL Time Warner also is talking with the Newhouse family, owners of Advance Publications Inc., about an investment in Road Runner, a high-speed Internet service with 1.9 million subscribers. Those discussions could result in AOL Time Warner or Time Warner Entertainment buying the family's Road Runner interest, the filing said.

Road Runner had sales last year of $220 million and a loss before interest, taxes, depreciation and amortization of $230 million.