Time Warner Inc posted a stronger-than-expected quarterly profit, as a rise in cable networks revenue helped offset declines in advertising sales at its AOL Internet and Time Inc publishing units.
Shares of the company, the first of the big US media conglomerates to post results, rose 5 percent in early trade on Wednesday, after it also affirmed its 2009 outlook and said it anticipates spinning off one or more parts of AOL.
Chief Executive Jeffrey Bewkes is trying to turn Time Warner back into a traditional media company consisting of cable networks like HBO, CNN and TNT, the Warner Bros film studio, and publishing units. Revenues at this newly defined content group declined 4 percent.
"The company currently anticipates that it would initiate a process to spin off one or more parts of the businesses of AOL to Time Warner's stockholders, in one or a series of transactions," Time Warner said in its 10-Q filing with the US Securities and Exchange Commission. This is the first quarter that Time Warner is reporting earnings since separating from its cable unit, Time Warner Cable Inc, on March 12.
Income from continuing operations was roughly flat at $555 million, or 46 cents a share, in the first quarter, compared to $548 million, or 46 cents, a year earlier. Profit excluding items was 45 cents, down from 48 cents a year ago but higher than the average analyst forecast of 39 cents, according to Reuters Estimates.
First quarter revenue fell 7 percent to $6.9 billion, but it was higher than the average analyst forecast of $6.75 billion, according to Reuters Estimates. Revenue at AOL fell 23 percent to $867 million, while revenue at Time Inc fell 23 percent to $806 million as advertising sales continued to decline.
Warner Bros revenue fell 7 percent to $2.6 billion, primarily due to lower DVD sales. Revenues at the cable networks unit rose 6 percent to $2.8 billion, thanks to a 9 percent rise in subscription revenues which offset a 2 percent decline in advertising revenues.
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