Time Warner Delivers Q4, Full-Year Gains

NEW YORK, January 31: Profits at Time Warner rose by 35
percent in the fourth quarter to $1.75 billion, while full-year net income more
than doubled to $6.55 billion.

“I’m delighted that 2006 proved to be a good year for Time
Warner,” said Dick Parsons, the chairman and CEO of the company. “Taken
together, our businesses performed well, and we achieved all of our announced
financial objectives. We successfully executed on our strategy—enabling
us to lead our industry and lay the foundation for creating significant new
value. At the same time, we returned billions of dollars directly to our
shareholders through dividends and stock repurchases.”

For the year, revenues were up 4 percent to $44.2 billion,
driven by gains at the cable and networks divisions. In the fourth quarter,
revenues climbed 8 percent over the same period in 2005 to $12.5 billion, also
due to increases at Time Warner Cable and at the cable networks.

At AOL, full-year revenues dropped 5 percent to $7.9
billion, due to a 14 percent decrease in subscription revenues, offset in part
by a 41 percent increase in advertising revenues. Operating income, however,
was up 71 percent to $1.9 billion, thanks to the $769 million pretax gain on
the sale of AOL’s access businesses in the U.K. and France. For the quarter,
revenues were down 8 percent to $1.9 billion, and operating income was up to
$913 million from $170 million. As of December 31, 2006, the AOL service had
13.2 million U.S. access subscribers, a decline of 2 million from the prior
quarter and 6.3 million from the year-ago quarter.

Time Warner Cable delivered a 34-percent increase in
full-year revenues to $11.8 billion, boosted by the addition of Adelphia’s
cable systems. Subscription revenues rose 34 percent to $11.1 billion, led by
video revenue growth of 26 percent, greater high-speed data revenues, up 38
percent, and an increase in digital phone revenues of 163 percent. Average
monthly subscription revenue per basic video subscriber climbed 11 percent to
approximately $90. Advertising revenues increased 33 percent to $664 million.
Operating income climbed 22 percent to $2.2 billion. In the quarter, revenues
were up 58 percent to $3.7 billion, and operating income increased 26 percent
to $633 million.

Filmed entertainment, encompassing Warner Bros.
Entertainment and New Line Cinema, saw its 2006 revenues drop 11 percent to
$10.6 billion. The company cited difficult comparisons to the prior year, when
the studio released Harry Potter and the Goblet of Fire, Charlie and the
Chocolate Factory and Batman
Begins. Operating income was also down 11
percent, to $784 million. Fourth quarter revenues fell 15 percent to $3.1
billion, and operating income declined 48 percent to $155 million.

Turner Broadcasting and HBO in the networks segment delivered
a 7 percent revenue increase for the quarter to $10.3 billion. Subscription
revenues climbed 9 percent, advertising revenues were up 4 percent and content
revenues increased 7 percent due mainly to higher sales of HBO’s original
programming, including the domestic cable sale of The Sopranos. Operating income grew 2 percent to $2.7 billion.
For the quarter, revenues rose 10 percent to $2.7 billion and operating income
grew 11 percent to $778 million.