http://www.tvweek.com/news.cms?newsId=10993 November 1, 2006 Time Warner Profit Surges on AOL, Cable Systems By Jon LafayetteTime Warner, the world's biggest media company, reported nearly a threefold rise in profit, citing advertising growth at the revamped AOL unit and gains at its cable television systems.
Story continues below...Time Warner on Tuesday said third-quarter net income surged to $2.3 billion, up from $853 million a year ago. Revenue rose to $10.9 billion from $10.2 billion. The earnings reflected $20 billion in acquisitions including new cable systems, and divestitures of $4 billion in assets.
AOL, which in July announced plans to shift from a subscription-based service to a free, ad-supported model, said a $151 million, or 46 percent, increase in advertising helped counter a $210 million drop in subscription revenue. With sharp cuts in expenses, including marketing costs to add subscribers, AOLs operating income rose 38 percent to $397 million.
"This quarter's results position the company to meet all of our full-year financial objectives," said CEO Dick Parsons. "We're particularly encouraged by AOL's early progress in making the transition to an advertising-supported business."
Analyst Spencer Wang of Bear Stearns said in a research report that ad growth and margins at AOL were better than expected.
Time Warner Cables revenues rose 44 percent with the acquisition of cable systems from Adelphia and Comcast on July 31.
Operating income for Time Warner's network group, which includes Turner Broadcasting, HBO and The WB, declined 21 percent due to the shutdown of the WB.
Ad revenues were up 16 percent for Turner Broadcasting. The company said 7 percentage points of that growth resulted from the acquisition of full ownership of Court TV.
Time Warner President Jeff Bewkes said that the scatter market for cable advertising appeared to be good, with Turner registering prices higher than the upfront by mid-single-digit percentages.
The company's stock rated at $19.58 a share Tuesday morning, down 2.15 percent from Monday's close.
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