AOL TIME WARNER STICKS BY POSITIVE FORECASTS

CFO Says Online Ad Revenue Will Bounce Back

By Published on .

NEW YORK (AdAge.com) -- AOL Time Warner forecast a recovery in advertising revenue in 2003, based on a strong upfront market, even while acknowledging the continued trouble of its online unit.

Speaking at the Deutsche Bank Securities Media Conference this morning, Chief Financial Officer Wayne Pace restated targets of 5% to 8% revenue growth and 5% to 9% growth in earnings before interest, taxes depreciation and amortization.

However, Mr. Pace noted online advertising at the America Online unit will likely lag, he said.

Last to bounce back
"The visibility there

Related Stories:
NBC UPFRONT CHAMP WITH $2.65 BILLION SCORE
Has Sold 83% of Inventory; CBS Has Only Sold 50%
AOL TIME WARNER FACES SHAREHOLDERS AS LEVIN 'FADES AWAY'
'Vision of a New Combined Company Got Off-track,' Chairman Says
AOL TIME WARNER REPORTS $54 BILLION LOSS
Largest Quarterly Corporate Loss in History
continues to be difficult. It will be the last [medium] to come back as the ad recession ends," he said.

Mr. Pace downplayed a report issued Tuesday by Lehman Bros. analyst Holly Becker, who lowered her estimates for the entire company based on lower expectations of online ad revenue. Ms. Becker forecast a 34% drop in America Online's advertising revenue, to $1.79 billion.

Mr. Pace stood by his earlier forecast of $1.8 billion to $2.2 billion in online ad revenue. The market has bottomed out, he said, but online advertising will bounce back after broadcast and print.

He said Chief Operating Officer Bob Pittman is focused on "addressing the issues on AOL," especially advertising.

Strong upfront
As for the rest of the media giant's operations, the second quarter is "ticking up a bit in TV" and publishing ad sales have been strong, said Mr. Pace. He noted AOL had written $100 million more in commitments during this broadcast upfront season over last year, and CPMs, or the cost per thousand viewers, have been at least at the same level as last year's upfront.

The cable upfront, which is just beginning, is expected to perform as well or better, thanks to higher audience numbers for cable networks such as HBO, he said. But he warned the upfront contracts will benefit only the fourth quarter and 2003 ad sales figures.

Additionally, the Time Inc. publishing unit showed positive year-over-year ad sales in May, even after excluding cross-promotions with sister companies, Mr. Pace said.

In this article:
Most Popular