Time Warner income dives in Q2 while revenue gains

Time Warner Wednesday reported a steep decline in net income for the second-quarter of 2004, saying that last year’s comparable figures were affected by asset sales, charges and other events. The New York media conglomerate reported revenue that was up nearly 10%, however, thanks to strong growth in its Filmed Entertainment, Networks and Cable divisions.

Time Warner Wednesday reported a steep decline in net income for the second-quarter of 2004, saying that last year’s comparable figures were affected by asset sales, charges and other events. The New York media conglomerate reported revenue that was up nearly 10%, however, thanks to strong growth in its Filmed Entertainment, Networks and Cable divisions.

The company’s AOL Internet division also managed to post rises on improved advertising revenue.

Time Warner reported total revenue of $10.9 billion for the quarter ended June 30, a 10% rise on the $9.9 billion reported a year ago. Net income sagged 27% from $1.1 billion, or 23 cents a share a year ago, to $777 million or 17 cents a share for the quarter being reported.

Despite the income decline, Time Warner managed to beat revenue and per-share expectations for the quarter. Analysts polled by Thomson First Call predicted earnings of 15 cents a share on revenue of $10.4 billion.

The company accounted for the income dive saying that items such as certain asset sales, charges and a $760-million gain from a settlement with Microsoft in the prior year affected comparability.

Time Warner said that it saw solid gains across all segments, with particular benefits from its Filmed Entertainment, Networks and Cable divisions, each of which posted double-digit growth. The Cable and Networks divisions both posted a 10% increase in revenue for the quarter, and Filmed Entertainment posted a 12% revenue increase.

AOL saw a 2% rise in its revenue during the second quarter, to $2.2 billion, while its operating income rose 31%, led by higher revenues from paid search which brought in some $31 million, Time Warner said.

The Internet division continued to bleed subscribers during the quarter, however. AOL had 23.4 million subscribers at June 30, down 668,000 from the year-ago period.

Despite the income drop and AOL’s subscriber losses, Time Warner said that it was enthusiastic about the quarter’s results, citing gains across all divisions. The company update it business outlook for the rest of the year, saying that it expects full-year adjusted operating income before depreciation and amortization to grow in the low-teens range, compared to $8.7 billion in 2003.

It also updated its expectations for AOL, predicting adjusted operating income before depreciation and amortization to grow in the low-to-mid-teens range, from a base of $1.5 billion in 2003.