Profit Drops at Time Warner

NEW YORK, April 30: Time
Warner’s first quarter profit dropped 36 percent to $771 million, on revenues
of $11.4 billion, a 2-percent rise on the same period last year.

Presenting the results,
Time Warner’s CEO, Jeff Bewkes, confirmed speculation that the company will spin off its Time Warner
Cable division, a move he says, “under the right circumstances, is in the best
interests of both companies’ shareholders. We’re working hard on an agreement
with Time Warner Cable, which we expect to finalize soon.”

Time Warner Cable’s
revenues were up 8 percent to $4.2 billion, with subscription revenues also up
8 percent to $4 billion. Video revenues gained 4 percent to $2.6 billion, led
in part by continued demand for digital video services and by price increases.
High-speed broadband revenues were up 1 percent to $1 billion. And telephony
revenues were up by 39 percent to $366 million. Ad revenues were up to $197
million, reflecting a 4-percent increase. Operating income gained 10 percent to
$636 million. Revenue generating units (RGUs) reached 33 million, with 896,000
net additions. Customer relationships totaled 14.7 million, with 96,000 net
additions. Triple play subscribers surpassed 2.6 million (or 18 percent of
total customer relationships).

In the filmed
entertainment segment, consisting of Warner Bros. Entertainment and New Line
Cinema, revenues gained 4 percent to $2.8 billion, led by releases such as I
Am Legend on home video and 10,000
B.C. in the theaters. The division
was hit by the writers’ strike though, resulting in lower TV license fees.
Operating income declined 25 percent to $183 million.

At Turner Broadcasting and
HBO in the networks segment, revenues rose by 10 percent to $2.7 billion, with
a 10-percent gain in subscription revenues and a 13-percent hike in ad
revenues. Operating income increased just 2 percent to $874 million.

At AOL, revenues decreased
23 percent to $1.1 billion, reflecting a 38-percent decline in subscription
revenues, offset slightly by a 1-percent increase in advertising revenues. And
operating income decreased 74 percent to $284 million, due mainly to the sale
of AOL’s German Internet access business, which generated a pretax gain of
approximately $670 million in the year-ago period.

—By Mansha Daswani