NYT: S.E.C. Pursues Time Warner Investigation

It isn't over. The Securities and Exchange Commission subpoenaed current and former top AOL officials in its ongoing investigation into alleged "round tripping," the practice of exchanging funds with another company and calling it ad revenue. Already having restated $190 million in phony advertising revenues, AOL has resisted restating $400 million that the SEC says was effectively a purchase rebate from Bertelsmann rather than a rational media deal. BMG music executives and other properties have complained that poor and over-priced AOL media was foisted on them, a phenomenon that many other executives across the industry may find familiar. The SEC indicated it hasn't forgotten about those other deals either.

The publicly reported ad revenues of companies, obviously involving many revenue recognition factors outside of simple media transactions, is proving to have been a poor methodology for comparing online ad industry strength and growth, especially given earlier periods' emphasis on the importance of topline (gross revenue) growth over and above profits.