NEW YORK — Fresh off a triumphant night at the Oscars, AOL Time Warner revealed Monday that it will take a massive $54 billion noncash charge in the first quarter after new accounting rules required it to write down goodwill.
The charge — which the company said in January would range from $40-$60 billion — is likely to trigger one of the biggest quarterly losses in corporate history. After the initial hit, however, AOL Time Warner’s amortization costs will fall and net income will rise by more than $6 billion a year, the company said in filing with the SEC.
AOL Time Warner shares slipped 1.18% Monday to $24.28, in line with other media stocks. The shares have been sinking in recent months under a barrage of negative news and bearish analyst reports on Internet service provider America Online.
The company’s Warner Bros. and New Line studios emerged with an handful of Oscars Sunday night for “Lord of the Rings: The Fellowship of the Ring” and “Training Day.”
Goodwill is a so-called intangible asset that represents the gap between the purchase price and the actual asset value of an acquired company. That gap became greater in many cases as markets and valuations tumbled.
Companies used to write down goodwill over many years, but now they must review it annually. Early this month, Vivendi Universal announced a writedown of about $13 billion for the new accounting regs.