Time Warner 3Q profit drops, boosts outlook

By ANDREW VANACORE
AP Business Writer

NEW YORK (AP) - Media conglomerate Time Warner Inc. reported a 38 percent drop in third-quarter profit Wednesday after being hurt by declines at its AOL and publishing segments.

Even so, the results beat expectations, helped by cost cutting. The company also boosted its full-year earnings forecast and said it remains on track to spin off AOL by the end of the year.

Still struggling with advertising declines, Time Warner confirmed that it will cut jobs at its magazine unit, Time Inc., though it would not reveal the extent of the cutbacks. It expects to take about $100 million in restructuring charges this quarter. Most of the cuts will come at Time Inc.'s news group, which includes Time magazine, Sports Illustrated, Fortune and Money. The company told the New York State Department of Labor that it plans to cut 280 jobs in New York by the end of January.

While magazines continue to see ads fall off, Time Warner offered more evidence that the outlook for its cable TV channels is improving, if tentatively.

The company, which owns the Turner cable networks in addition to HBO, said rates that advertisers are paying for commercial time are up by double-digit percentages from earlier in the year. That matches comments Tuesday from Viacom Inc., which owns the MTV and BET cable networks.

Time Warner said Wednesday its profit fell 38 percent to $661 million, or 55 cents per share, in the July-September quarter, down from $1.1 billion, or 89 cents per share, a year ago.

Excluding unusual items, earnings came to 61 cents a share. That tops the analysts' average forecast of 53 cents, according to a survey by Thomson Reuters.

Last year's earnings included results from Time Warner's spun-off cable unit. Earnings from continuing operations fell a more modest 14 percent.

Revenue fell 6 percent to $7.1 billion, in line with analysts' estimates.

The AOL unit saw a 23 percent drop in revenue in the latest quarter. It ended the quarter with 5.4 million dial-up subscribers, down 438,000 from the quarter before.

Time Warner's movie studio fared better. Film revenue dropped 4 percent, with "Harry Potter and the Half-Blood Prince" and "The Final Destination" falling short of ticket sales for last year's "The Dark Knight." But cost cutting helped the film unit boost its operating profit by 6 percent.

Time Warner shares fell 6 cents to $30.10 in trading Wednesday.

The company said it expects adjusted earnings of at least $2.05 per share for the year, up from its earlier forecast of $1.98.

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