AOL Sees Subscriber Losses Slowing

America Online's subscriber loss is going to slow down, but the company needs a few more months to improve its forecast of how bad the falloff will be.

That's what Don Logan, chairman of AOL Time Warner's (AOL Quote) Media and Communications Group, said Tuesday.

Logan's comments came in a presentation that he and Jeff Bewkes, chairman of the Entertainment and Networks Group, made Tuesday afternoon at a Goldman Sachs investor conference. Continuing AOL Time Warner's portrayal of 2003 as a turnaround year, the two executives spoke positively about AOL's ability to achieve sustainable growth and the earnings potential of the company's television networks.

Shares in AOL Time Warner -- which has announced it will soon drop the "AOL" from its corporate name -- rose 11 cents Tuesday to close at $15.11.

In discussing drivers of growth and areas for cost-cutting at the online unit, Logan called AOL's subscriber base "the big variable."

Losing subscribers to both broadband Internet services and discount dial-up competitors, AOL has seen its U.S. subscriber count drop from 26.7 million last September to 25.3 million in June. The company is hoping to attract content-only customers to the service through its "Bring Your Own Access" program.

The drop-off in the online service's narrow-band subscriber count is "going to slow down considerably," Logan said Tuesday. But, he said, it wouldn't be until the end of the year before the company could give a "much better projection" of the decline in traditional dial-up customers.

In the meantime, Logan committed to double-digit growth in 2004 for AOL, saying key contributors would be increased advertising revenue, the company's performance in Europe and subscription services such as telephone call alerts for dial-up users and anti-virus protection.

Areas for cost-cutting, he said, include network expenses, marketing and customer service. There's still "a lot to go" in terms of cutting network expenses, Logan said. If the service can match its costs to the size of the business, he said, it can be profitable for a long time.

< Previous

1 2

Next >