July 30, 2003 7:46 AM PDT

SEC asks AOL for subscriber documents

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Did AOL inflate subscriber numbers?

July 25, 2003
The Securities and Exchange Commission has asked America Online to turn over documents related to its controversial bulk-subscription program, according to reports.

The request, reported by The Wall Street Journal on Wednesday, comes just days after the newspaper and other news organizations discovered that AOL's unpublicized bulk-subscription program drew at least 830,000 subscribers between 2001 and 2002--a large chunk of the 5 million subscribers the company added during that period.

Investors and analysts placed great value on subscriber numbers, closely watching the monthly subscriber figures released by AOL--the Internet unit of AOL Time Warner--to gauge the company's financial strength and prospects. The controversy surrounding the program arose because of the quality of bulk subscribers, who paid lower monthly fees and used the service less often.

AOL spokeswoman Tricia Primrose declined to comment to CNET News.com on the SEC request. SEC spokesman John Heine told News.com that the agency had no comment.

On Tuesday, an executive in AOL's legal department sent an e-mail asking employees to hold on to any documents they have that are related to the bulk-subscription program and other material outlining the company's policies and procedures for counting subscribers, the Journal reported Wednesday.

The newspaper also noted that AOL rarely mentioned the program publicly, not even disclosing the size of its bulk sales in its filings to the SEC.


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