AOL Time Warner’s Outlook Revised

Standard & Poor’s revised its outlook for AOL Time Warner Inc. on Friday to “negative” from “stable” because of weak operating performance at the media company’s America Online unit.

The credit rating agency affirmed AOL’s BBB-plus corporate credit rating, its third-lowest investment grade.

A negative outlook suggests conditions are present that may lead to a downgrade, not that a downgrade is imminent.

AOL shares fell 45 cents in after-hours trading after climbing $1.26 to $10.90 during regular trading on the New York Stock Exchange.

S&P; said it is concerned that America Online’s deteriorating advertising sales might crimp profit and increase the burden on the company’s Time Warner divisions to make up any shortfall.

It said a Securities and Exchange Commission inquiry into accounting practices at America Online, disclosed by AOL on Wednesday, adds to investor uncertainty and may consume significant amounts of management time, impeding AOL’s ability to improve its operating performance.

The shares had fallen to a near four-year low Thursday after AOL disclosed the SEC inquiry.

AOL stock is off 66% this year and yields on its bonds have been pushed to junk-like levels.