After reporting that it ended its fiscal year an unprecedented US$99 billion in the red, AOL Time Warner said Wednesday that Ted Turner also will step down from his post as vice chairman in May.
The company’s fourth-quarter earnings statement revealed a $45.5 billion charge as a result of depreciation in its America Online division. Its net loss of $98.7 billion for all of 2002 also included a $54 billion charge as a result of a change in accounting rules.
The company’s fourth-quarter revenue of $11.4 billion was up 8 percent from the same time last year, exceeding analysts’ expectation of $11.2 billion, according to Thomson First Call.
AOL Time Warner said that without the one-time accounting markdown, it would have met or exceeded analysts’ expectations.
Debt Reduction Planned
The company plans to implement a debt reduction plan in 2003, with the goal of consolidating its debt to $20 billion via “the use of free cash flow and other de-leveraging initiatives.”
Part of the plan involves an initial public offering of the Time Warner Cable division, planned for sometime this year, AOL Time Warner spokesperson Mia Carbonell told the E-Commerce Times. The company also has discussed selling its book division, and it recently sold nearly $800 million worth of its shares in Hughes Electronics.
AOL Time Warner said growth in the first quarter of 2003 is expected to be in the low- to mid-single digits, with full-year growth in the mid-single digits.
Turner, who helped architect the $109 billion merger between AOL and Time Warner two years ago, said that his decision to leave the company was not made lightly.
“As you know, this company has been a significant part of my life for over 50 years,” Turner said. “I have the deepest respect for you, the senior management and my fellow members of the board. With this team in place, I am optimistic that the company will be able to move forward and reach its true potential.”
The media mogul, who founded the CNN network and Turner Broadcasting before they were sold to Time Warner in 1996, said he now will devote much of his time to philanthropic activities and “socially responsible business efforts” that give him greater personal satisfaction.
Asked whether Turner will remain on the company’s board past May, Carbonell told the E-Commerce Times, “Dick Parsons expects that Turner will remain on the board, and they will be meeting in the next few weeks to discuss the matter further.”
Turner currently owns 3.4 percent of the company.
Integrations at Root?
Turner’s move comes amid other top executive reshuffling. AOL co-founder Steve Case resigned as chairman of the board earlier this month, and CEO Richard Parsons was elected to serve as the new chairman.
Both the upper management shuffles and the company’s well-publicized financial struggles have been attributed to the difficulty of integrating the AOL and Time Warner corporate cultures.
“It took a lot longer than anyone anticipated,” UBS Warburg analyst Christopher Dixon told the E-Commerce Times in an interview. “The fundamental structure of the business, where people are looking to get information and entertainment, has never changed.”
Much of the executive movement lately has been part of an effort to stabilize the company, Dixon said. “One of the biggest issues [now] is to rebuild credibility, not just with investors, but to rebuild employee morale,” he noted.