Time Warner Profit Drops

NEW YORK, May 2: Time Warner’s profit for the first quarter
of this year slipped 18 percent to $1.2 billion, despite a 9-percent gain in
revenues to $11.2 billion.

At AOL, revenues fell 25 percent to $1.5 billion, due to a
43-percent fall in subscription revenues, offset in part by a 40-percent rise
in advertising revenues. Operating income increased from $265 million to $1.1
billion, due primarily to the pretax gain of approximately $670 million on the
sale of AOL’s Internet access business in Germany.

Time Warner Cable’s revenues rose 61 percent to $3.9
billion. Subscription revenues increased 61 percent to $3.7 billion, led by
video revenue growth of 59 percent, greater high-speed data revenues, up 57
percent, and an increase in voice revenues of 97 percent. Average monthly
subscription revenue per basic video subscriber was approximately $91.
Advertising revenues increased 73 percent to $189 million. Operating income
grew 28 percent to $579 million. As of March 31, 2007, Time Warner Cable served
approximately 13.4 million basic video subscribers; 6.5 million customers
subscribed to two or more primary services (video, high-speed data and voice
services), representing 44 percent of customer relationships. Triple-play
subscriptions totaled 1.7 million, or 12 percent of customer relationships, at
the end of the first quarter.

At Warner Bros. Entertainment and New Line Cinema, revenues
were down 1 percent to $2.7 billion, due primarily to difficult prior year
comparisons in worldwide home video revenue; last year included Harry Potter
and the Goblet of Fire and Wedding
Crashers. These declines were partly offset
by the strong worldwide theatrical performance of Warner Bros.’ 300 and increased license fees from worldwide television
distribution. Operating income decreased 34 percent to $243 million.

In the Networks division—with Turner Broadcasting and
HBO—revenues of $2.4 billion were flat compared to the prior year
quarter. Subscription revenues rose 6 percent and content revenues were up 3
percent, but ad revenues fell 12 percent. Operating income increased 6 percent
to $860 million.