AOL says ad revenue no impact on net
AOL Time Warner's America Online unit said accounting transactions for advertising revenues between 2000 and 2002 were appropriate and accounting for them differently would have had no impact on profits.
The company was reacting to a report in the Washington Post this morning which said America Online boosted advertisement revenue through a series of unconventional deals from 2000 to 2002, before and after its merger with Time Warner Inc.
The deals cited by the paper comprised less than 2% of AOL's revenues during the period in question, AOL said in a statement.
"Accounting for them (the transactions cited in the report) differently would have had no impact on the company's net income," it said.
The Washington Post said AOL converted legal disputes into ad deals. It negotiated a shift in revenue from one division to another, bolstering its online business.
It sold advertisements on behalf of eBay Inc, booking the sale of eBay's ads as AOL's own revenue, and bartered advertisements for computer equipment in a deal with Sun Microsystems Inc.
AOL also counted stock rights as advertisement and commerce revenue in a deal with a Las Vegas firm called PurchasePro.com Inc.
AOL also found ways to turn the dot-com collapse to its advantage, renegotiating long-term ad contracts it risked losing into short-term gains that boosted its quarterly revenue, the Post said.
AOL said this morning accounting for all the transactions in the Post report was "appropriate and in accordance with GAAP."
AOL's auditors Ernst & Young reviewed all but one of these transactions at the time they were accounted for, it said.
Since the report, Ernst & Young has confirmed in writing that the accounting and related financial statement disclosure for all the transactions were appropriate, it said.
Separately, a AOL Time Warner spokesman declined to comment on a the Wall Street Journal report that the he company's board is meeting today and is likely to discuss the elevation of Home Box Office chairman Jeffrey Bewkes and Time Inc chairman Don Logan.
The spokesman also made no comment on rumours chief operating officer Robert Pittman is set to quit.
