Time Warner Swings to Profit

NEW YORK, August 2: Time
Warner today announced a second quarter profit of $1 billion, versus the $409
million loss recorded in the year-ago period, on revenues of $10.7 billion, up
just 1 percent on Q2 2005.

At its AOL division,
revenues were down 2 percent to $2 billion, with subscription revenues falling
11 percent. Ad revenues, however, were up 40 percent. The division recorded an
operating income of $328 million, a 5 percent drop. At the end of the quarter,
it had 17.7 million subscribers in the U.S., a decline of close to 1 million
from the previous quarter and 3.1 million from a year ago. In Europe, AOL had
5.6 million members.

Time Warner Cable posted
gains, with revenues up 15 percent to $2.7 billion, driven by a 16-percent gain
in subscription revenues. The business was boosted by revenue gains for
high-speed data, digital phone and enhanced digital video services. Average
monthly subscription revenue per basic cable subscriber rose 14 percent to
approximately $91. Operating income grew 22 percent to $595 million. Time
Warner Cable had 11.1 million basic video cable subscribers at the end of June.

Filmed Entertainment,
encompassing Warner Bros. Entertainment & New Line Cinema, didn’t fare as
well, with revenues down 10 percent to $2.4 billion. The company attributed the
decline to difficult comparisons with Q2 2005, which included the home
entertainment releases for Ocean's 12 and The Aviator and
TV sales on the Harry Potter
movies. However, operating income was up 11 percent to $141 million.

The Networks segment,
covering Turner Broadcasting System, HBO and The WB, saw revenues rise 9
percent to $2.7 billion, with gains in subscriptions and advertising.
Subscription revenues climbed 9 percent due to higher rates and increased
subscribers at Turner and HBO as well as the consolidation of Court TV.
Advertising revenues were up 8 percent, led by 11 percent growth at Turner.
Content revenues increased 7 percent due primarily to higher ancillary sales of
HBO's original programming. Operating income grew 8 percent to $621 million.