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CNN Live At Daybreak
One of Top Internet Providers Changing Corporate Strategy
Aired May 14, 2003 - 05:17 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: The loss of thousands of subscribers is leading one of the country's top Internet providers to change its corporate strategy.
Greg Clarkin has more on the trouble surrounding CNN's parent company.
(BEGIN VIDEOTAPE)
RUTH CISOWSKI, AOL SUBSCRIBER: The page for log in and it's doing nothing. It's just sitting there.
GREG CLARKIN, CNN CORRESPONDENT (voice-over): Ruth Ciscowski is an America Online subscriber, but not for much longer. She's jumping ship, fed up with the hassles she says come with AOL.
RUTH CISOWSKI, AOL SUBSCRIBER: The combination of the spam, the time to sign on, I'm getting a lot of unwanted mail that I have to manually delete all the time. And it just gets to be a pain. But the advertising pop-ups that go on, sometimes I can't even get on to the Web site.
CLARKIN: Ciscowski is not alone. AOL subscribers are leaving in droves. At the low end, dialup subscribers are dumping AOL for cheap or even free Internet service providers. At the high end, phone and cable counties are winning broadband users. Merrill Lynch estimates more than a half a million subscribers abandoned AOL in the first quarter. But the net number is much lower, 290,000. The losses were offset by new subscribers to AOL's lucrative broadband service.
AOL is scrambling to keep subscribers happy, offering them content from Time Warner show biz units. But the strategy is just months old and it's too early to tell if people want what AOL is offering.
JONATHAN GAW, INTERNATIONAL DATA CORP.: They've got 25 million customers and they don't go away overnight. You know, even if you lose 300,000 customers every quarter, that leaves them hanging around for a few decades. I think they have some time here, but it's not a lot.
CLARKIN: But what the company does have are a lot of problems, including a whopping $25 billion in debt. CEO Richard Parsons is selling assets to cut the debt, like its Atlanta sports teams, and the company is going to sell shares in its Time Warner cable systems to get rid of even more debt. But that IPO is delayed thanks to another of the company's problems, a mountain of legal issues. The Justice Department and the Securities and Exchange Commission are investigating to see if AOL was playing accounting games with advertising revenue before and after it bought Time Warner. And the results of the investigations could lead to even more legal troubles.
JOHN COFFEE, COLUMBIA UNIVERSITY: The private plaintiffs usually like to move in the wake of an SEC settlement or investigation. That gives their action greater credibility. It tells the judge that the SEC thinks these financial statements were overstated and therefore I guess there's a role for these private plaintiffs seeking to get compensation for investors.
CLARKIN (on camera): The government investigations continue to hang over AOL Time Warner. It's expected they'll result in a hefty fine and it's feared yet another massive restatement of the company's earnings may result, as well.
Greg Clarkin, CNN Financial News, New York.
(END VIDEOTAPE)
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired May 14, 2003 - 05:17 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: The loss of thousands of subscribers is leading one of the country's top Internet providers to change its corporate strategy.
Greg Clarkin has more on the trouble surrounding CNN's parent company.
(BEGIN VIDEOTAPE)
RUTH CISOWSKI, AOL SUBSCRIBER: The page for log in and it's doing nothing. It's just sitting there.
GREG CLARKIN, CNN CORRESPONDENT (voice-over): Ruth Ciscowski is an America Online subscriber, but not for much longer. She's jumping ship, fed up with the hassles she says come with AOL.
RUTH CISOWSKI, AOL SUBSCRIBER: The combination of the spam, the time to sign on, I'm getting a lot of unwanted mail that I have to manually delete all the time. And it just gets to be a pain. But the advertising pop-ups that go on, sometimes I can't even get on to the Web site.
CLARKIN: Ciscowski is not alone. AOL subscribers are leaving in droves. At the low end, dialup subscribers are dumping AOL for cheap or even free Internet service providers. At the high end, phone and cable counties are winning broadband users. Merrill Lynch estimates more than a half a million subscribers abandoned AOL in the first quarter. But the net number is much lower, 290,000. The losses were offset by new subscribers to AOL's lucrative broadband service.
AOL is scrambling to keep subscribers happy, offering them content from Time Warner show biz units. But the strategy is just months old and it's too early to tell if people want what AOL is offering.
JONATHAN GAW, INTERNATIONAL DATA CORP.: They've got 25 million customers and they don't go away overnight. You know, even if you lose 300,000 customers every quarter, that leaves them hanging around for a few decades. I think they have some time here, but it's not a lot.
CLARKIN: But what the company does have are a lot of problems, including a whopping $25 billion in debt. CEO Richard Parsons is selling assets to cut the debt, like its Atlanta sports teams, and the company is going to sell shares in its Time Warner cable systems to get rid of even more debt. But that IPO is delayed thanks to another of the company's problems, a mountain of legal issues. The Justice Department and the Securities and Exchange Commission are investigating to see if AOL was playing accounting games with advertising revenue before and after it bought Time Warner. And the results of the investigations could lead to even more legal troubles.
JOHN COFFEE, COLUMBIA UNIVERSITY: The private plaintiffs usually like to move in the wake of an SEC settlement or investigation. That gives their action greater credibility. It tells the judge that the SEC thinks these financial statements were overstated and therefore I guess there's a role for these private plaintiffs seeking to get compensation for investors.
CLARKIN (on camera): The government investigations continue to hang over AOL Time Warner. It's expected they'll result in a hefty fine and it's feared yet another massive restatement of the company's earnings may result, as well.
Greg Clarkin, CNN Financial News, New York.
(END VIDEOTAPE)
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
