Time Warner earnings dip to $1.2 b

Televisionpoint.com Correspondent
Time Warner Inc on Wednesday reported first-quarter profit that beat Wall Street expectations, boosted by a rise in new cable video, Internet and phone subscribers and AOL advertising sales. The world's largest media company said earnings fell to $1.2 billion, or 31 cents per share, from $1.5 billion, or 32 cents per share, a year earlier.

The year-earlier results included a gain of 6 cents per share from a string of asset and investment sales. Revenue rose 9% to $11.2 billion, while analysts on average were expecting $11.1 billion, according to Reuters Estimates. Excluding gains from asset sales such as AOL's Germany dial-up business, profit was 22 cents per share, beating Wall Street expectations of 20 cents.

Time Warner said quarterly cash flow rose 19% to $3.1 billion, which Oppenheimer & Co analyst Thomas Eagan said was largely in line with Wall Street estimates.

The media conglomerate's results benefited from double-digit profit increases at AOL and cable services division, offset by a drop in profit at the movies division. "It looks like the AOL strategy is on track," said Christopher Marangi, associate portfolio manager at the Gabelli Value Fund. Last summer, AOL began to provide most of its services for free to attract more online ad dollars. Early signs look good for the once-embattled division, executives said.

While AOL's revenue fell 25%, dragged by a 43% decline in subscription revenue, operating profit before depreciation and amortization rose 27%. Ad sales, a closely tracked figure, increased 40%.

Cable revenue rose 61%, and operating profit before depreciation and amortisation rose 54%, boosted by growth from newly acquired systems. Movie division revenue fell 1%, failing to beat year-earlier sales of "Harry Potter" and "Wedding Crashers" DVDs. The division's operating in-come fell 34%, as weaker DVD sales offset strong box office for "300". Cable networks revenue were largely flat, but operating income rose 6% from higher subscription revenue.

At Time Warner's publishing unit, revenue fell 1%, and operating in-come declined 49% because of higher restructuring costs.Time Warner stock has risen 20% over the past 12 months after the company, which also owns People magazine and the Warner Bros. film studio, overhauled AOL's business model.