Time Warner Delivers 5-Percent Profit Gain

NEW YORK, August 1: Time Warner’s second-quarter revenues
grew 5.2 percent to $1.1 billion, on revenues of $11 billion, a 6-percent gain,
driven in part by the cable segment.

Consolidated subscription revenues for the company were up
10 percent to $6.2 billion, while ad revenues were up 4 percent to $2.3
billion, but content revenues fell to $2.2 billion.

Dick Parsons, chairman and CEO, said: "I'm pleased with
Time Warner's solid results for the quarter. Our performance over the first
half of 2007 keeps us firmly on track to achieve all of the company's full-year
financial objectives.”

Time Warner Cable was a key driver of the company’s gains,
with revenues up 59 percent to $4 billion. Subscription revenues increased 59
percent to $3.8 billion, led by 59 percent growth in video revenues, a 54
percent increase in high-speed data revenues and a 75 percent rise in voice revenues.
Advertising revenues increased 70 percent to $226 million. Operating income
increased 31 percent to $711 million. As of June 30, 2007, Time Warner Cable
served approximately 13.4 million basic video subscribers. Nearly 6.7 million
customers (45 percent) subscribed to two or more services (video, high-speed
data and voice). Triple-play subscribers totaled 1.9 million, a 13 percent
penetration.

AOL took the biggest hit in the quarter, with revenues down
38 percent to $1.3 billion, resulting from a 55-percent fall in subscription
revenues, offset partially by a 16-percent increase in advertising revenues.
The decline in subscription revenues is in line with AOL's previously announced
strategy to offer its e-mail, certain software and other products free of
charge to broadband users in the U.S. The fall was also attributed to the sales
of Internet access businesses in the U.K., France and Germany. Operating income
increased 9 percent to $360 million.

Filmed entertainment was down 5 percent to $2.3 billion, due
primarily to lower revenues from television product, as the prior year quarter
included the second-cycle syndication availability of Friends and the off-network availability of the first three
seasons of Without a Trace. Also
contributing to the decline were difficult prior year comparisons in worldwide
home video—which last year included revenue from Harry Potter
and the Goblet of Fire—as well as
reduced television licensing on made-for-theatrical product. Operating income
decreased 43 percent to $81 million.

In the networks segment, made up of Turner Broadcasting and
HBO, revenues declined 1 percent to $2.6 billion, reflecting an 11 percent fall
in advertising revenues, offset partly by a 5 percent increase in subscription
revenues. Operating income increased 4 percent to $634 million.

Publishing revenues of $1.3 billion were essentially flat
compared to the prior year quarter, and operating income rose 13 percent to
$256 million.