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Subject: Time Warner posts $541 mil Q3 profit thanks to TV assets

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Gold Trader

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Date Posted: 11:13:05 10/22/03 Wed

Time Warner posts $541 mil Q3 profit thanks to TV assets
Oct. 23, 2003

By Georg Szalai
NEW YORK -- Time Warner early Wednesday reported improved bottom line results for its third quarter driven by growth at its cable systems operation and TV networks.

However, the world's largest media conglomerate continued to see weaker results at its America Online and music units in the latest period, while its filmed entertainment financials were mixed.

For the third quarter, Time Warner posted a profit of $541 million. That compared with a $57 million profit in the year-ago period, or a loss of $55 million from continuing operations.

The profit figure for the latest quarter, which slightly exceeded Wall Street expectations, includes $127 million in gains from such moves as the sale of a stake in technology firm Chinadotcom. It also includes a $41 million noncash impairment charge for the company's Atlanta sports teams that are being sold and $46 million in unspecified restructuring charges.

Time Warner's third-quarter revenue rose 4% to $10.3 billion, which was slightly shy of the $10.4 billion average analyst projection.

The conglomerate's TV networks unit saw revenue increase 10% driven by subscription, advertising and content revenue gains. Advertising revenue rose 14% thanks to a 12% improvement at the Turner networks and a 22% increase at the WB network.

Meanwhile, filmed entertainment revenue fell 7% due to difficult year-over-year comparisons in the TV and home video areas. However, operating income rose 21% as margins expanded for theatrical and home video releases. "The Matrix Reloaded" and "Terminator 3" were among the key releases for the quarter that drove results at the film division.

The conglomerate on Wednesday also reaffirmed its previous 2003 guidance for mid single-digit percentage growth of revenue and operating income before depreciation and amortization.

The New York Times said in its Wednesday edition that the Securities and Exchange Commission is questioning TW chairman and CEO Dick Parsons and former chairman Steve Case in connection with a probe into the AOL division's accounting. The SEC has been questioning the conglomerate's booking of advertising revenue in a deal with German media house Bertelsmann AG.

In a conference call with analysts Wednesday morning, management did not give an update on the accounting investigation. A TW spokeswoman declined comment.

The conglomerate's net debt -- a key focus of investors in recent quarters -- amounted to $24.1 billion as of Sept. 30 with management saying it was on track to meet its $20 billion debt target by the end of 2004.

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