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AOL Delivers Strongest Revenue Growth In A Decade

Brand Group Adjusted OIBDA improved significantly versus the prior year period, primarily due to the growth in display revenue discussed above as well as a reduction in personnel, primarily at Patch, and lower marketing costs. Lower year-over-year Brand Group operating expenses were partially offset by growth in TAC associated with AOL’s search marketing-related efforts.

Membership Group

Membership Group revenue declines reflect a 10% decline in subscription revenue driven by 10% fewer domestic AOL subscribers year-over-year. Membership Group revenue declines were partially offset by a 28% year-over-year reduction in churn rate to 1.3% and by 4% year-over-year growth in domestic average monthly subscription revenue per AOL subscriber (ARPU). Reduced churn and ARPU growth continues to reflect the benefits of AOL’s retention program and the impact of a price rationalization program. The decrease in Membership Group revenue year-over-year was also impacted by a decrease in search revenue of 7% due to fewer search queries resulting from a decline in domestic AOL subscribers.

Membership Group Adjusted OIBDA declines primarily reflect the decline in subscription revenue discussed above, partially offset by a decline in costs associated with the decline in subscribers.

AOL Networks

AOL Networks revenue increased 50% year-over-year, driven by significant growth in Third Party Network revenue which includes Excluding, Third Party Network revenue grew approximately 20% year-over-year, driven by growth in the sale of premium formats across AOL’s programmatic platform. AOL Networks’ year-over-year revenue comparison was negatively impacted by the divestiture of StudioNow in Q1 2013. StudioNow contributed $1.4 million in revenue to AOL Networks in Q4 2012.

AOL Networks Adjusted OIBDA declined $0.5 million year-over-year driven by increased investments in our programmatic platforms and premium formats.

Corporate & Other

Corporate & Other Adjusted OIBDA improved significantly year-over-year, primarily driven by declines in marketing costs as a result of AOL’s broader cost reduction efforts, and a decline in legal costs.

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