Online overstatement

Szalai, Georg
July 2003
Hollywood Reporter -- International Edition;7/29/2003, Vol. 379 Issue 36, p65
While investors late last week discussed a media report about how AOL Time Warner's America Online unit increased its subscriber numbers in the past through discount promotions, analysts largely shrugged off the story as a nonevent. In its Friday edition, the 'Wall Street Journal' detailed how AOL in 2000 started selling limited-use online accounts in bulk to such large corporations as JCPenney and Target Corp. Companies paid only a few dollars for each account each month, and in turn sold the AOL subscriptions to employees at a higher price. AOL won at least 830,000 subscribers in 2001 and 2002, which amounted to nearly 17% of customer gains over that period. While this practice might have increased AOL's subscriber growth, analysts said they were aware of it. Still, AOL's weak subscriber trends will likely remain a liability for AOL TW.


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