AOL Time Warner Inc. revealed in its annual report yesterday that it will take a $54 billion first-quarter charge, primarily to reflect declines in the value of AOL's purchase of Time Warner Inc. under new accounting rules dealing with goodwill, according to Reuters.
The charge will make the firm's future earnings appear larger. However, it reflects the fall in valuation of the combined entity since AOL purchased Time Warner in a transaction initially valued at $181 billion.
Also confirmed in the filing were previous reports that the company was in discussions with the Newhouse family, which owns newspaper and magazine firm Advance Publications Inc., regarding its stake in Time Warner Entertainment and high-speed Internet service Road Runner. AOL Time Warner said the outcome of the discussions could impact its cable operations.
TWE is 74.5 percent owned by AOL Time Warner while AT&T Corp. owns the remainder of the firm. AOL Time Warner and AT&T have had discussions during the past year to end the partnership.