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Tuesday, 10 September, 2002, 04:58 GMT 05:58 UK
Gloom deepens at AOL Time Warner
AOL's business interests
The prolonged advertising slump is likely to continue to hammer revenues at America Online, parent company AOL Time Warner has warned.

The world's biggest media group stressed, however, that it should still meet overall group forecasts for full-year revenue and cash flow.

Strength at its traditional media businesses - including Time Warner Cable and television networks such as HBO - have helped offset America Online's weakness, it said.

The troubles at AOL come on top of a spate of bad news at the once-admired firm, including an investigation into its accounts and a series of poor results.

Overhaul

America Online is now likely to be overhauled by its new boss, Jon Miller.

The revamp is the most urgent part of a group-wide programme to assess the financial health of the company's many diverse media interests.

Executives were rethinking their approach to AOL's advertising, the company's chief financial officer, Wayne Pace, said.

"We are spending money to make our capability more media-rich so we can compete better with other companies that sell advertising on the internet," Mr Pace said.

Mr Miller is also expected to simplify the division's management structure.

Ad slump

Advertising and commerce revenue this year at AOL was predicted to be in the $1.8bn-2.2bn (1.2bn-1.4bn) range, but will now reach $1.7bn at best, the firm said.

In addition to the ad slump, AOL has suffered from slowing growth in its dial-up internet service and it has been slow to move large numbers of subscribers to its more expensive high-speed service.

But AOL Time Warner said it stood by the online unit.

"It's a business we want to own rather than not own," Mr Pace said.

See also:

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