AOL Time Warner wants to cut its debt from $26 billion to about $20 billion by year-end 2004. The company already is prepping a stock offering for cable systems and may sell its book business.
Mr. Parsons has made debt a priority as AOL Time Warner struggles to fix America Online-and as the company warned last week of weaker performance in two other operations, cable systems and music.
The media conglomerate posted a record-breaking net loss of $98.7 billion in 2002, including a loss of $44.9 billion in the fourth quarter, due to charges to earnings to reflect the company's decline in value. AOL Time Warner had booked a $54 billion charge in the first quarter to reflect a decline in value of Time Warner assets since the merger of America Online and Time Warner in January 2001. It shocked Wall Street with another $45.5 billion charge in the fourth quarter to reflect a decline in value of America Online ($33.5 billion), cable ($10.5 billion) and music ($1.5 billion).
Revenues were up 7% for the year, to $41.1 billion, thanks mainly to strong growth at the film division.
AOL Time Warner also disclosed another executive departure: Vice Chairman Ted Turner, biggest individual shareholder with a 3.1% stake.
Mr. Parsons said 2003 will be "a reset year."
Chief Financial Officer Wayne Pace said the company expects to grow 2003 revenues in the mid-single-digit percentages and earnings before interest, taxes, depreciation and amortization will remain essentially flat. AOL revenues will remain flat, with advertising/commerce revenues down 40% to 50%. The first quarter will likely mark the low point for the year, where declines in AOL advertising revenue will more than offset improved performances by the filmed-entertainment and network units, said Mr. Pace.
The stock fell 17.4% to end the week at $11.66. That's still well above the stock's post-merger nadir of $8.70 last summer. But since the merger closed, AOL Time Warner stock has plummeted 75.3%.
contributing: bradley johnson