AOL Time Warner (NYSE: AOL) appears to be dissing investors -- even slapping them in the face -- by disclosing key information to analysts before sharing it publicly. This issue involves accounting for goodwill. We'll explain.

Goodwill is value that an acquiring company pays above the estimated value of the assets it acquires. When a company acquires or merges with another, and the stated value of the deal at the time is higher than the asset's estimated worth later, there is goodwill to write down. And now, after new 2002 rules, goodwill must be reappraised and written down annually, rather than amortized over many years.

AOL Time Warner wrote down $54 billion in goodwill last year. Today, The Washington Post reports it will write down at least another $10 billion (to be announced Jan. 29) based on the declining value of its online unit. Before investors flip out, realize that this figure is mainly an illusion. It isn't real money. It won't affect cash flow -- it's a non-cash, non-operating charge.

So, the much larger issue to highlight is this: The Post writes that AOL "has alerted Wall Street analysts" about this news. In fact, UBS Warburg analyst Christopher P. Dixon is paraphrased as saying, "AOL Time Warner officials have done a good job of warning analysts that a giant, non-cash charge to earnings is on the way."

That's just great. AOL Time Warner has done a good job of warning... analysts. Hey, AOL Time Warner, what about your thousands of investors? Have you already forgotten about Regulation Fair Disclosure (Reg FD)? Come on. Your investors learn about this stuff from a newspaper, while you're telling analysts over lunch? Plus, in the company's December press release to investors looking ahead to 2003, the writedown wasn't mentioned at all.

Reg FD is meant to prevent companies from treating material information with privilege. If a company is releasing material information, it must strive to do so in a fashion equitable to all. If it inadvertently releases material information to a select group, the company has a 24-hour "cure" time, during which it can issue a press release.

So, if AOL Time Warner has indeed been telling analysts this material information, it had better share it with investors now. Will it? A phone call to the company led to a dead end. Not surprising.

The sad thing is, AOL Time Warner could go far to ease inevitable investor concern by explaining this goodwill stuff in a well-written press release. Is that too much to ask from the world's largest media company? Well, fair disclosure isn't too much to ask. It's required.