Time Warner Profit Drops 53% MARKETPLACE By Bloomberg

Nov 08, 10:22 AM

Current Headlines: By Gillian Wee

Time Warner, the world's largest media company, said third- quarter profit declined 53 percent from a year ago, when asset sales bolstered results. Revenue for the quarter rose on box office receipts from the latest Harry Potter film.

The company said net income fell to $1.09 billion, from $2.32 billion a year earlier, when Time Warner had a gain of $727 million tied to the sale of a stake in Time Warner Telecom and Warner Bros.' Australian theme parks, as well as a $373 million tax benefit.

Excluding some items, profit met analysts' estimates. Sales advanced 8.6 percent to $11.7 billion.

A 33 percent jump in film studio revenue helped make up for declines at the AOL Internet division. Growth at Time Warner Cable slowed after subscriber losses in Dallas and Los Angeles. Jeffrey Bewkes, picked this week to succeed Richard Parsons as chief executive on Jan. 1, will try to wring more profit from the company's divisions.

"The film business was a standout with the release of Harry Potter," said Chris Marangi, a fund manager at Gamco Investors in Rye, New York. "They need to show they're executing on AOL, the integration of acquired systems on cable, and they're actively weighing options for the business."

Time Warner shares, which have fallen 16 percent this year, were up 2 cents at $18.35 in afternoon trading in New York.

The company said that it still planned to earn $1.07 a share this year, before discontinued operations and an accounting change. On that basis, profit in the third quarter was 24 cents a share, in line with analysts' projections.

The film unit's profit more than doubled to $268 million on ticket sales from "Harry Potter and the Order of the Phoenix," "Rush Hour 3" and "Hairspray." Sales rose to $3.2 billion.

Profit at AOL fell 24 percent to $295 million in the quarter, hurt by a 38 percent drop in sales.

The unit lost 851,000 Web-access subscribers in the quarter, although that was less than the 1.36 million projected by Bear Stearns analyst Spencer Wang. Ad sales rose 13 percent, more than Wang's 11 percent estimate.

AOL agreed Wednesday to buy the online advertising company Quigo Technologies, its fourth ad acquisition this year. Quigo will give AOL's customers more control over where their ads appear on Web sites.

Bewkes, now operating chief and president, is the architect of AOL's move to offer its service free while trying to generate advertising revenue.

AOL's advertisers can use Quigo's AdSonar software to measure the effectiveness of their campaigns by letting them determine the exact Web page where their ads will run. The acquisition pits AOL against Google, which owns 5 percent of AOL and gets revenue through an ad- search partnership.

AOL said on Oct. 15 that it would eliminate 2,000 employees, or 20 percent of its staff. Time Warner is also moving AOL's offices to New York from Dulles, Virginia, to be closer to advertisers as it tries to catch up with rivals like Yahoo and Google.

Originally published by Bloomberg News.

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