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Time Warner Reports Decline in Q2 Profits

Jul 28, 2004  •  Post A Comment

Media giant Time Warner on Wednesday reported a 27 percent decline in second-quarter profit as strong results at the company’s film and television network divisions weren’t able to offset one-time gains reported in the year-ago quarter.

Profit for the three-month period ended June 30 was $777 million, or 17 cents a share, compared with a year-ago profit of $1.06 billion, or 23 cents a share. The 2003 figure reflected a series of one-time gains, including a settlement with software giant Microsoft and several pre-tax gains, that totaled $528 million. The 2004 numbers take into account charges from the sale of its music business to former Vivendi Universal Vice Chairman Edgar Bronfman Jr.

Revenue rose 10 percent to $10.9 billion.

By division, the company’s largest operating unit, Time Warner Cable, reported a 10 percent increase in revenue to $2.1 billion, while operating income climbed 10 percent to $443 million. The company attributed the growth to a 10 percent increase in subscription revenue, a 25 percent increase in high-speed data revenue, higher basic cable rates and a 7 percent rise in advertising revenue.

Time Warner Cable managed 10.9 million subscribers, down 21,000 from a year ago, yet the company added 124,000 digital video subscribers for a total of 4.6 million, and added 127,000 million high-speed data customers for a total of 3.5 million.

At the company’s networks division, which includes cable nets TNT, TBS and HBO, revenue rose 10 percent to $2.4 billion, while operating income rose 99 percent to $602 million, reflecting the absence in the 2004 quarter of a $178 million impairment charge booked in the 2003 quarter for the company’s sale of its winter sports teams.

In addition to not having to book a charge in the most recent quarter, the networks division also benefited from a 14 percent gain in subscription revenue, a 6 percent increase in advertising revenue and a 15 percent rise in content revenue related to higher home-video sales of HBO original programming.