Time Warner Reports Improved Profits

NEW YORK, November 1: Time
Warner’s third quarter profit rose to $2.3 billion from last year’s $853
million, on revenues of $10.9 billion, a 7 percent rise from Q3 2005, driven by
its cable and networks segments.

Dick Parsons, the
company’s chairman and CEO, noted, “Time Warner continues to build momentum and
deliver value for our shareholders. This quarter’s results position the company
to meet all of our full-year financial objectives. We're particularly
encouraged by AOL’s early progress in making the transition to an
advertising-supported business. Just as importantly, Time Warner Cable is
generating outstanding results, even while successfully integrating its newly
acquired cable systems. In addition, our capital allocation efforts continue to
drive incremental value—including our $20 billion share repurchase
program as well as this year's more than $20 billion of acquisitions and almost
$4 billion of announced or completed non-core asset divestitures.”

At AOL, revenues were down
3 percent to $2 billion, with subscription revenues down 13 percent. That fall,
in line with AOL’s transition to offering its services for free to broadband
subscribers, was partially offset by a 46-percent increase in ad revenues.
Operating income grew 38 percent to $397 million. As of September 30, 2006, the
AOL service had 15.2 million U.S. subscribers. In Europe, the AOL service had
5.5 million subscribers.

Time Warner Cable posted a
revenue increase of 44 percent, to $982 million. Subscription and ad revenues
were also up 44 percent each. Average monthly subscription revenue per basic
cable subscriber rose 9 percent to approximately $89, and operating income grew
17 percent to $550 million. As
of September 30, 2006, Time Warner Cable managed 13.5 million basic video
subscribers and 7 million digital cable subscribers, for a penetration of 52
percent. DVR subscribers ended the quarter at 2.2 million, representing 31 percent of digital
customers. Total residential high-speed data subscribers at the end of the
quarter were 6.4 million.
Digital phone subscribers were up to 1.6 million.

In the filmed
entertainment segment (Warner Bros. Entertainment and New Line Cinema),
revenues fell 10 percent to $2.4 billion, due to difficult comparisons to the
prior year period, which included Charlie and the Chocolate Factory and Batman Begins as well as New Line’s Wedding Crashers. Operating income decreased 25 percent to $120
million.

At Turner Broadcasting,
HBO and The WB, revenues were up 4 percent to $2.5 billion, reflecting higher subscription (up 9
percent) and advertising (up 6 percent) revenues. The 23 percent decline in
content revenues is related to a decrease at HBO, due mainly to a difficult
comparison to the prior year quarter, which included higher syndication sales
of Sex and the City.