Time Warner hurt by advertising slowdown, but tops estimates

Time Warner Inc. (TWX), the world's largest media company and parent of this Web site, continues to be hurt by a drop-off in advertising sales.

Net income at the owner of Warner Bros. film studios, CNN and AOL fell 14 percent in the first quarter to $661 million, or 55 cent a share, from $771 million, or 65 cents a year earlier. Revenue dropped 7 percent to $6.9 billion as gains in the Networks segment and Filmed Entertainment. could not offset decreases at the AOL and Publishing businesses. Excluding some items, profit was 45 cents, beating the 40-cent estimate of analysts surveyed by Bloomberg.

Time Warner also reiterated its full year 2009 outlook saying its adjusted earnings per share would be little changed from their $1.98 level in 2008.

"I'm pleased that our Content Group grew Adjusted OIBDA (Operating Income Before Depreciation and Amortization) by 3% during the quarter – despite a challenging economic environment that's affecting all of our businesses, particularly advertising at our AOL and Publishing segments," said Chief Executive Jeffrey Bewkes in the earnings release. "Our results keep us firmly on track to achieve our full-year business outlook."

Lower DVD sales pushed down revenue in Filmed Entertainment by 7 percent to $2.6 billion. Operating Income increased 17 percent to$214 million.

Time Warner's HBO and Turner Networks cable channels were helped by gains in subscription revenue, which made up for the drop-off in advertising. Revenue climbed 6 percent to $2.8 billion while operating income gained 10 percent to $960 million.

Revenues at AOL decreased 23 percent to $867 million, due to a 27 percent decline in subscription revenues and a 20 percent decrease in advertising revenue. Operating Income decreased 47 percent to $150 million. During the quarter, AOL had 106 million average monthly domestic unique visitors and 58 billion domestic page views, according to comScore Media Metrix, which translates into 181 average monthly domestic page views per unique visitor.

Publishing suffered from a steep decline in advertising and subscription revenue. The business, which includes Time magazine and People, lost $32 million in the quarter compared with operating income of $93 million a year earlier. Revenue plunged 23 percent to $806 million.

Shares of Time Warner rose 3.5 percent to $22.52 in pre-market trading.
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