Summary:

Time Warner (NYSE: TWX) managed to keep its net income from slipping much during Q3 but, with revenue “essentially flat” and a $100-125 mill…

Time Warner (NYSE: TWX) managed to keep its net income from slipping much during Q3 but, with revenue “essentially flat” and a $100-125 million charge for Time Inc. layoffs on the way, followed other media companies by trimming its 2008 outlook today. Between New Line, Time Inc and some other restructuring, the company says the total charges by the end of 2008 could top $300 million. (That would seem to suggest the major cuts are done and that AOL won’t take a big hit in Q4 but this economy doesn’t offer much in the way of guarantees.)

TWX reported Q3 revenue of $11.7 billion, with Cable, Networks and Filmed Entertainment growth offsetting declines in Publishing and AOL. Profit dipped nearly 2 percent to $1.067 billion from $1.086 billion in Q307 but earnings per share increased slightly to $.30 from $.29. Via Marketwatch, the FactSet Research consensus estimate was 27 cents a share on $11.8 billion in revenue.

AOL: Revenues dropped 17 percent to $1 billion, due in part to lower advertising but primarily because of the continuing move away from subscriptions. Subscription revenues declined 26 percent, or $165 million, with a loss of 2.6 million subs year over year. (AOL sold its Eurpoean access businesses last year.) Advertising revenues dropped 6 percent, or $33 million. The key problem: the reward for pulling away from subscription was supposed to be advertising increases supported by pumped-up traffic to free content and services. The reality: for a variety of reasons internal and external, AOL’s advertising isn’t delivering on that promise. Declines in display advertising on AOL Network sites and third-party sales were “offset partially by an increase in paid-search advertising.” AOL delivered operating income of $268 million, compared with $295 million in Q307.

Publishing: Time Inc revenues were dragged down 7 percent to $1.1 billion by a combo effect — advertising down 8 percent, subscription down 1 percent and “other” down 18 percent. Operating income took the biggest hit, down 35 percent to $162 million due to those declines and a real-estate impairment of $30 million.

Release | Webcast | Business outlook | Slides | Transcript (via Seeking Alpha)

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