Is the AOL train wreck ever going to finish?

Filed in archive IPTV on August 3, 2005

I have never been one to praise America On Line. In fact, I wear my lack of an AOL email address and never having signed up for their subscription service as a badge of honor. But, I am positive on Time Warner's future prospects and AOL (regrettably) is a part of that media colossus.

Recently, AOL has been making moves to change its strips. Some of those moves play right into the theme of this blog. In brief: AOL wants to become an internet video portal dependent on advertising revenue and modeled loosely around Time Warner's cable division (which is growing well). While the old adage "time will only tell" applies, today's Time Warner financial reports show some signs of hope.

AOL brought in total revenues of $2.1 billion, down from $2.2 billion for the year ago period, as dial-up subscribers over age 15 fled in droves. AOL unit lost nearly a million subscribers last quarter, around four percent of its total base.

AOL estimates the streaming event on-demand audience can be five to 10 times larger than Live 8's. MSN execs have made similar remarks about the power of live event streaming online.

Parsons added, "Although it's still early days, we have every reason to be optimistic that this audience-driven strategy will be very successful."

The positive news for AOL is on the advertising front -- earnings of $30 million from paid search and $60 million from its Advertising.com unit. Ad revenues were up 45 percent to $320 million. That would be over 15% of AOL's revenue for the quarter.

"AOL is positioning itself to take advantage of the same broadband trends that are currently benefiting cable," said Chairman and CEO Dick Parsons. "Live 8 demonstrates how large audiences are starting to use this medium."