Time Warner Inc. Reports Q3 Results


Media and entertainment giant Time Warner Inc. reported strong cash flow growth on increased sales in its third quarter results today.

In the third quarter, which ended September 30, 2006, revenues rose to $10.9 billion, a 7 percent gain over the same period in 2005, thanks to growth in the Cable and Network segments.

Cash flow, defined as Adjusted Operating Income before Depreciation and Amortization, grew to $2.9 billion, up 16 percent from the previous year.

In a surprise for analysts, AOL revenue declines were lower than expected due to an increase in advertising and subscription revenue. According to Jessica Reif Cohen, who covers this market for Merrill Lynch,the decline was expected to be six percent, but Time Warner reported only a 3 percent decline.

“We’re particularly encouraged by AOL’s early progress in making the transition to an advertising-supported business, “Time Warner Chairman and CEO Dick Parsons said. “Just as importantly, Time Warner Cable is generating outstanding results, even while successfully integrating its newly acquired cable systems.”

Cable systems revenues rose 44 percent to 3.2 billion thanks to not only the Adelphia acquisition in July, but also due to subscription and advertising growth.

The growth, however, was offset by a decrease for the Filmed Entertainment segment. Despite the strong performance of Superman Returns, revenue decreased 10 percent from the previous year which included a roster of hit releases including Batman Begins, Charlie and Chocolate Factory and Wedding Crashers.

The company reported a net income of 2.32 billion, or 0.57 cents a share for the three months ending September 30 compared to $853 million, or 0.18 a share, one year ago.

In making the announcement, Chairman and CEO Dick Parsons indicated it was a good quarter and said the “results position the Company to meet all of our full-year financial objectives.”