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Earnings: Time Warner 3Q Disappoints; AOL Makes Ad Gains;, Help Time Inc.

Time Warner managed to disappoint investors in the third quarter even though net income more than doubled. The media conglomerate also reaffirmed its earnings guidance
Net income was $2.3 billion, or 57 cents per share, compared with $853 million, or 18 cents per share, a year earlier. Excluding discontinued operations and other one-time items, profit was 19 cents a share. Revenue jumped 7% to $10.9 billion. But Wall Street was looking for earnings of 20 cents and sales of $11.08 billion. The stock, which had gained in recent weeks, fell in pre-market trading.
We’ll have more from the earnings call but here’s CEO Dick Parsons setting up his version of the headlines in the release: “We’re particularly encouraged by AOL’s early progress in making the transition to an advertising-supported business. Just as importantly, Time Warner Cable is generating outstanding results even when successfully integrating its newly acquired cable systems.”
Some highlights:
— As expected, AOL revenue declined 3 percent to $2 billion due to decreased subscriptions. Subscription revenue fell $210 million, or 13 percent, while advertising revenue gained $151 million, or 46 percent. Operating income rose 38 percent to $397 million. AOL had 112 million monthly unique visitors and nearly 49 billion domestic page views, according to comScore. It had 15.2 million subscribers in the U.S. down 2.5 million from the prior quarter and 4.9 million from a year earlier as the company unwinds its ISP business.
Higher online advertising revenue at and helped boost operating income at Time Inc. by 8 percent to $226 million. Revenue rose 1 percent to $1.3 billion.
— Revenue at Time Warner Cable (which is being partially spun off) rose 44 percent to $3.2 billion, helped by the acquisition of certain Adelphia systems from Comcast. These deals added about 3.2 million basic video, 1.6 million digital and 1.2 million high-speed Internet customers. Operating income jumped 17 percent to $550 million.
— Filmed Entertainment revenue fell 10 percent to $2.4 billion, as operating income dropped 25 percent to $120 million. The company blamed the decline on “difficult comparisons to the prior year period.”
— Higher subscription and advertising revenue boosted revenue at the networks business by 4 percent to $2.5 billion. Operating income fell 21 percent to $526 million after taking an impairment charge for the WB Network.
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