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  "documentTitle": "AOL, Inc. (AOL)",
  "authorId": "03_Starboard_Value",
  "authorName": "Jeffrey C. Smith",
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  "presentationDate": "2012-05-23 00:00:00",
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  "notes": "Uses a peer benchmark to expose the poor performance of the target company's business unit.",
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      "kind": "callout",
      "text": "We believe this is the right comparison as Search is not dependent on Display. Even if you include Search, performance is still poor. We believe this would be a good first step, but it is still not enough to make Display profitable.",
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      "kind": "callout",
      "text": "On any metric, it appears AOL's Display business is substantially underperforming.",
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      "text": "WebMD provides health information services to consumers, physicians, and other healthcare professionals in the US.\nGiven that the majority of WebMD's revenue is derived from public portal advertising, we believe that it serves as a relevant point of comparison to AOL's Display business.\nBy focusing on a single attractive vertical, WebMD has amassed revenue of $558 million and EBITDA of $181 million in 2011, representing a 32% EBITDA margin.",
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      "text": "EBITDA margin: 32%",
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      "kind": "paragraph",
      "text": "As just one example, in 2011, WebMD Health was highly profitable on a similar-sized revenue base.",
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      "kind": "quote",
      "text": "The Company stated that: \"Ending Q1 2011, there were 401 Patches above $2,000 per month in revenue...\" We arrived at our cost estimates for Patch of $160 million in 2011 based on the following statement by the Company's Chief Financial Officer at the AOL Investor Day on June 16, 2011: \"...we're going to spend $160 million a year this year on Patch...\" Further, in a research report published on May 10, 2012, Barclays estimated that Patch generated EBITDA losses of $151 million in 2011.",
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      "text": "(1) Approximately 85% of consolidated revenues come from Public Portal Advertising and Sponsorship, while 15% come from Private Portal Services. (2) Company filings and Capital IQ. (3) Segment revenue figures other than Patch are from Company filings...",
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      "kind": "table",
      "text": "AOL Financials (3) ($ in millions) Revenue EBITDA EBITDA Margin Total Display $573 ($545) -95% Total Display + Search 931 (285) -31% Display ex Patch 560 (398) -71% Display ex Patch + Search 918 (138) -15%",
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      "text": "WebMD Health Financials (2) ($ in millions) Revenue EBITDA EBITDA Margin 2011 WebMD Financials $559 $181 32%",
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      "kind": "title",
      "text": "On any metric, it appears AOL's Display business is substantially underperforming.",
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      "kind": "title",
      "text": "Other similarly-sized premium content sites are highly profitable",
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      "evidence": "Comparing WebMD financials to AOL financials to highlight performance gap.",
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      "name": "Cost Of Inaction",
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      "evidence": "The document highlights the costs of inaction and the need for change in AOL's operations and strategy",
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      "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point",
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