Time Warner's 3Q Earnings Rise Despite AOL Struggles

The company's profits were sharply higher, although its online division continued to lose subscribers and revenue.



NEW YORK (AP) -- Time Warner Inc. reported continued problems at its struggling AOL division Wednesday, including more losses of subscribers and declining revenues, even as the overall company posted sharply higher profits for the third quarter.

The giant media company, which officially dropped "AOL" from its corporate name earlier this month, said Wednesday it earned $541 million, or 12 cents a share, in the three months ending Sept. 30, versus $57 million, or 1 cent a share, in the same period a year ago.

Revenues rose 4 percent to $10.33 billion from $9.96 billion in the same period a year ago.

The AOL division lost an additional 688,000 subscribers during the quarter, bringing its total subscriber base to 24.7 million, 2 million lower than at the same time a year ago.

AOL has been losing subscribers as users sign up for faster ways to connect to the Internet. The company also says it has been cutting non-paying subscribers in an effort to boost profitability.

Revenues at the AOL division declined 5 percent, despite higher revenues from subscriptions, because of a continued falloff in online advertising revenue.

Other parts of the Time Warner media family did well. Overall, the company reported a 9 percent gain in a measure of core earnings called operating income before depreciation and amortization, because of better results in its cable-TV, cable networks, and Warner Bros. studios.

Excluding the effects of one-time charges and gains, the company reported earnings of 11 cents per share, beating the estimate of 9 cents per share of Wall Street analysts surveyed by Thomson First Call.

Also Wednesday, company spokesman Ed Adler declined to comment on a report in The New York Times that top executives from the company, including chief executive Richard Parsons and former chairman Steve Case, have been subpoenaed by the Securities and Exchange Commission as part of an investigation into the company's accounting for an advertising deal with the German media company Bertelsmann.

The SEC has been looking into the company's accounting practices for more than a year. In March, the company indicated that it might have to restate its financial results by as much as $400 million because of the SEC's questioning of its deal with Bertelsmann. The company says it believes its accounting is correct.

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