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AOL Saps Time Warner Q1 Earnings

Apr 29, 2009  •  Post A Comment

Time Warner reported lower first-quarter earnings because of big losses at AOL, but said profits were up at what it called its “Content Group.”
Net income was $661 million or 55 cents a share, down from $771 million or 64 cents a share, a year ago. Revenues fell to $6.9 billion from $7.5 billion.
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Time Warner reported its earnings separately from Time Warner Cable, which has been spun off into a separate company.
Profits fell at Time Warner Cable because of expenses due to the separation and programming costs that rose 8%.
At Time Warner’s networks unit, which includes Turner Broadcasting and HBO, operating income before depreciation and amortization rose 11% to $1.1 billion because of increased revenue and lower newsgathering costs, the company said. Programming expenses increased 2% to $925 million. Revenues were up 6% to $2.8 billion, with a 9% gain in subscription revenues offset by a 2% drop in ad revenues. The company said ad revenues were down slightly at its domestic entertainment networks, but up slightly at the news networks, including CNN.
Time Warner Chief Financial Officer John Martin said the company was expecting ad revenues to be down by a mid-single-digit figure in the second quarter, when the company had a strong performance a year ago.
Mr. Bewkes said he thought Turner was in a good position going into the upfront, offering scale, reach and original programming at about two-thirds the cost of commercials on broadcast television. “That’s a very good environment for us,” he said.
Mr. Bewkes also said Time Warner has been in discussions with distributors about its “TV Everywhere” initiative, which allows subscribers to its cable networks to access programming via broadband on a variety of devices.
He said he expected there to be trials in the second half of the year. A key is creating software that authenticates that the broadband user is a subscriber, either through cable, satellite or a telephone company.
But Mr. Bewkes said the program is relatively simple, especially compared to software that allows people to buy programming on iTunes.
By allowing consumers to use the content they subscribe to wherever and whenever they want, “We give consumers more for their money,” he said, a proposition that’s good for all networks except perhaps the broadcasters.
“They’re in a different position and have different problems,” he said.
Time Warner reaffirmed its earnings outlook for the year.
(11:55 a.m.: Updated throughout)

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