Time Warner earnings rise 21 percent

Wednesday, February 1st 2006, 10:37 am
By: News On 6

NEW YORK (AP) _ Time Warner Inc.'s profits rose 21.2 percent in the fourth quarter on strong results from the company's cable TV, movie studios and cable networks businesses.

The results, which beat analysts' expectations, come as the giant media company is rebuffing calls from financier Carl Icahn to break up the company or take other radical steps to boost its lagging share price.

Time Warner's CEO Dick Parsons delivered a rebuke to Icahn in a conference call with investors Wednesday morning, saying the company ``will not experiment with flavor-of-the-day'' strategies of boosting shareholder value. Earlier this year media conglomerate Viacom Inc. split itself in two in a bid to regain favor on Wall Street.

Icahn is leading a group of investors who want a shake-up at Time Warner, but on the whole they only own about 3 percent of the company's stock. Icahn's demands include larger share buybacks and a complete spinoff of Time Warner's cable TV division.

The New York-based media conglomerate, whose huge array of media properties includes HBO, CNN, Warner Bros. and Time magazine, earned $1.37 billion in the last three months of 2005, up from $1.13 billion in the same period a year ago.

On a per-share basis, earnings rose to 29 cents from 24 cents.

Excluding one-time gains of 4 cents per share in both the current quarter and the year-ago period, the earnings came in ahead of the 22 cents per share that analysts polled by Thomson Financial expected.

However, Sanford C. Bernstein analyst Michael Nathanson told investors in a note that the profit lift came entirely from an unexpectedly low tax rate, and the company's forecast for profit growth in 2006 was lower than he had expected.

Nonetheless, Time Warner's shares rose 47 cents, or 2.7 percent, to $18 in morning trading on the New York Stock Exchange _ slightly below where they were a year ago.

Like other media companies, Time Warner's shares have suffered over the past year due to concerns that rapid technological changes such as music and video downloading and the growth of the Internet will harm traditional media businesses.

But Parsons called those concerns ``overblown,'' and said that he was pleased with the company's performance over the past year, with one ``glaring and frustrating exception _ our current stock price.''

In a rebuff to Icahn's call to replace Time Warner's managers and break up the company, Parsons said the company would still consider strategies for lifting the share price but cautioned against impatience.

``No one can run these businesses better than the current management is running them,'' Parsons said.

Time Warner's revenues rose 7 percent to $11.9 billion from $11.1 billion a year ago on gains in cable TV, movie and TV production, cable networks and magazine publishing.

Time Warner also said it had repurchased $3 billion of its own stock to date under a $12.5 billion share buyback program that its board authorized last year. It has proposed a partial spinoff of the cable TV unit.

Profits at Time Warner's cable TV unit rose 11 percent on a 13 percent increase in revenues as the division continued to sign up more customers for premium services like high-speed Internet and digital video. It also added 34,000 basic video subscribers, for a total of almost 11 million. Time Warner's cable business is No. 2 to Comcast Corp.

AOL turned in a 5 percent rise in profits despite an 8 percent decrease in revenues, while the company's Warner Bros. and other Hollywood studios saw a jump of 42 percent in fourth-quarter profits on an 11 percent gain in revenues.

Publishing results rose 11 percent on a 5 percent rise in revenues despite restructuring charges of $28 million. Time Warner's Time Inc. magazine division laid off a number of senior executives in December, including a former chief financial officer, its top two ad sales executives, and the president of Time magazine.

For the full year, Time Warner earned $2.91 billion, or 62 cents per share, versus $3.36 billion or 72 cents per share in 2004. Revenues rose 3.7 percent to $43.7 billion from $42.1 billion.