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Turner nets get hammered

Ad sales drop 8% in second quarter; other AOL Time Warner results are mixed 7/22/2001 08:00:00 PM Eastern

The recession is getting harsh for Turner Broadcasting System, whose cable networks suffered a sharp drop in ad sales in the second quarter.

In revealing mixed companywide results for the second quarter, AOL Time Warner disclosed that ad sales by its TV networks dropped 8% during the three months ended June 30. The company didn't offer much detail on individual TV operations but did note that sales at broadcast network The WB actually rose. That means that combined sales for TBS, TNT, CNN and other divisions dropped more than 8%.

Higher license fees from cable systems do offset that, particularly at ad-free Home Box Office, and so the entire network division's revenues increased 2%, and cash flow rose 14%. But the ad slide was big.

"The cable networks are probably seeing advertising declines for the first year in history," said Sanford Bernstein & Co. media analyst Tom Wolzien. "It's not a good sign for everyone else."

In announcing the results, AOL Time Warner CEO Gerald Levin tried to focus investors' attention on the ad gains at the AOL online service, whose combined advertising and e-commerce revenues increased 37%.

AOL Time Warner's cable systems' sales rose 14%, and cash flow increased 13% for the quarter. The MSO is experiencing surprisingly strong growth in new products, particularly high-speed-modem subscriptions, which have already exceeded some analysts' targets for the entire year. Time Warner Cable's revenues jumped 12%, to $51.06 per subscriber.

March