AOL Time Warner sees 2001 shaping up as a strong year once a comparatively slow Q1 is out of the way. Despite hand-wringing over the state of online and offline advertising, the company says ad sales will drive its revenue and earnings because, in the words of its CEO, it is in a "a different zone" than the competition.
 |
|
|||||||
|
||||||||
|
||||||||
By
For the full year, AOL Time Warner is looking for especially strong growth in subscriber and advertising revenues to drive its various businesses and brands. Total revenue growth for full-year 2001 is projected in the 12% to 15% range, to around $40 billion. Kelly said per share cash earnings will grow between 25% to 30%.
A different zone
Breaking the year's revenue down, the company sees full-year subscription revenues growing 12% to 14%, with content revenues growing between 6% and 8%, and advertising and commerce revenues growing in the 18% to 22% range. Given the recent concerns about the market for both online and offline advertising, it's noteworthy that advertising and commerce is by far the company's fastest-growing segment, and executives expressed great confidence in that continuing.
AOL Time Warner CEO Gerald Levin said during a conference with analysts and investors that the company was in a "different zone" than its competitors. Co-COO Bob Pittman said the dominant position enjoyed by the AOL service and other company properties help buffer it from an advertising slowdown. In fact, Pittman said, the ability to target ads can actually make the online properties more appealing to advertisers during a downturn.
New business initiatives
AOL Time Warner's advertising and commerce revenues should also be supported by a set of initiatives it announced Wednesday for its various business divisions. These initiatives also flesh out how the divisions are supposed to work together for the merger's promised "synergy."
The CNNfn financial cable channel will be re-branded as CNN Money, with a new emphasis on personal finance and small business. The new format will include both the cable channel and a website designed to work together. CNN Money will also get promotional support from the AOL service's Personal Finance Channel, as well as from Time Inc. magazines such as Fortune and Money.
Music
Moving from matters of money to music, the company also announced what it said was its "broadest cross-divisional music promotion to date." New releases by Warner Music artists will be promoted to AOL members on the service's Music and Entertainment Channels, and to non-AOL subscribers through the Web-based Winamp.com and Spinner.com services. The campaign is being modeled on the successful promotion last year of new albums by Madonna and Matchbox Twenty.
The promotional program will also make available 30-day, timed-out, secure digital downloads of selected audio tracks, making it a wide-scale test for the virtual distribution of music. Music video excerpts and artist-branded custom radio stations, chats, and bulletin boards are also part of the mix, as are purchasing options, links to label and artist websites, and the bundling of AOL software on selected artists' CDs.
Shared infrastructure
Beyond those and other specific company cross-promotions announced Wednesday, AOL Time Warner also announced operational initiatives for how its various services and technology platforms will be managed.
The websites of over 35 AOL Time Warner media brands will be moved to shared facilities that, the company says, will let it leverage its network infrastructure and personnel. Sites being moved include Time.com, People.com, EntertainmentWeekly.com, and other Time Inc. brands, as well as the Warner Bros. sites.
In addition, existing AOL and Netscape technology will be integrated with the relocated sites, adding new functionality for communication, e-commerce, and other applications. While all this will "greatly enhance the consumer experience," the company also said the shared infrastructure will make it easier "to move audience traffic among its various properties," and allow the sites to scale quickly as volume increases.
All this said, there is nothing especially new in the cat's cradle of plans and initiatives AOL Time Warner announced Wednesday. The broad outline of nuclear-powered cross-promotion has been part of the hype surrounding the company -- both pro and con -- since the AOL/Time Warner deal was first announced last year. But with the deal now done, we start dealing with the reality -- as AOL Time Warner company proceeds with the integration of AOL into "the very fabric of the company's movie, publishing, TV, cable, and music businesses."
Nico Detourn lives in California, working out of a converted master bedroom that, in moments of grandeur, she thinks of as the Fool's Silicon Valley bureau. At the time of publication, she owned shares of AOL Time Warner. To see her other stock holdings, click here.
RSS Headlines
Fool UK
