Time Warner posts moderate losses
30 Apr 2009
Media and entertainment group Time Warner Inc posted a stronger-than-expected quarterly profit, as a rise in cable network revenue helped offset declines in advertising sales at its AOL Internet and Time Inc publishing units.
Shares of Time Warner, the big US media conglomerates to post results, gained on Wednesday after it also affirmed its 2009 outlook and said it anticipates spinning off one or more parts of AOL.
Time Warner chairman and chief executive Jeffrey Bewkes is trying to turn Time Warner back into a traditional media company consisting of cable networks like HBO, CNN and TNT, the Warner Bros film studio, and publishing units. Bewkes said on a conference call that Time Warner will announce its plans for AOL's restructuring "very soon."
Time Warner said it also notified Google Inc of its intention to buy back its 5 per cent stake in AOL. Chief financial Officer John Martin said the process could take a few months. He added that CFO the current quarter will be the "most challenging from a growth perspective," as the company is hurt by continuing weak ad revenue and poor home video sales
Bewkes completed the first major leg of his strategy to focus on content with the separation of its former cable unit, Time Warner Cable Inc on 12 March.
Time Warner's income from continuing operations was roughly flat at $555 million, or 46 cents a share, in the first quarter, compared with $548 million, or 46 cents per share, a year earlier. Earning per share was 45 cents, down from 48 cents a year ago but higher than the average analyst forecast of 39 cents, according to Reuters Estimates.
The company has posted a profit of $661 million for the first three months ended 31 March 31, a fall of 14.3 per cent against the year-ago period. The company had a profit of $771 million in the same period a year ago, it said in a statement.
In the first quarter, the group witnessed substantial drop in revenues at the AOL, Publishing and Filmed Entertainment divisions. At AOL, sales slumped 23 per cent to $867 million, primarily on account of steep falls in subscription and advertising revenues.
The group recorded revenues of $6.95 billion in the latest quarter against $7.47 billion in the comparable period. "In the quarter, Revenues declined seven per cent from 2008 to $6.9 billion, due mainly to decreases at the AOL, Publishing and Filmed Entertainment segments, offset partially by an increase at the Networks segment," the statement noted.
According to the company, revenues in the Filmed Entertainment segment dipped 7 per cent to $2.6 billion, impacted by lower DVD sales. This was driven by fewer home video releases and reduced catalogue sales in the current year quarter, as well as the impact of unfavourable foreign exchange rates and reduced theatrical revenues, it added.
In the Publishing Segment, revenues fell 23 per cent to $806 million, as advertisement sales plunged 30 per cent. "The decline in Advertising revenues reflected decreases in print magazine revenues... As well as lower custom publishing revenues and declines in online revenues," it said.
"With our separation of Time Warner Cable, Time Warner has become a more content-focused company. We're also working to determine the right ownership structure for AOL," Time Warner's Jeff Bewkes said.
