Time Warner Tops Zacks Consensus

Despite tough macro-economic conditions, Time Warner Inc. (TWX - Snapshot Report), the global leader in media and entertainment businesses, reported better-than-expected third-quarter 2009 results that topped the Zacks Consensus Estimate.

The quarterly earnings of 61 cents a share beat the Zacks Consensus Estimate of 52 cents, but dropped 6% from 65 cents delivered in the prior-year quarter. On a reported basis, including one-time items, quarterly earnings came in at 55 cents a share, sharply down by 38% from 89 cents posted in the year-ago quarter.

On account of better-than-expected results at its Content Group -- comprising Networks, Filmed Entertainment, Publishing and Corporate segments -- Time Warner boosts its business outlook. The company now expects its full year 2009 earnings to be $2.05 per share, up from $1.98 previously anticipated.

Total revenue for the quarter tumbled 6% to $7,135 million due to a fall in revenue at the AOL, Publishing and Filmed Entertainment segments, partially offset by growth in the Networks segment.

Adjusted operating income before depreciation and amortization (OIBDA) dipped by 9% to $1,804 million due to declines at the AOL and Publishing segments, partially offset by growth at the Networks and Filmed Entertainment segments. The last two segments are faring better than Publishing and AOL due to lower dependency on advertising dollars.

Networks revenue jumped 5% to $2,874 million driven by 9% growth in subscription revenue, partly offset by a 12% fall in content revenue and 1% decline in advertising revenue.

Filmed Entertainment revenue fell 4% to $2,780 million mainly due to lower revenue from home video and interactive games and the adverse impact of currency fluctuations.

Time Warner is also grappling with the slump in print advertising demand amid the global recession, as advertisers are migrating to the Internet. Consequently, Publishing revenue dipped 18% to $914 million following a 22% fall in advertising revenue, 13% decline in subscription revenue and 24% drop in non-magazine revenue.

Revenue from company’s web media unit AOL slipped 23% to $777 million due to a 29% drop in subscription revenue, resulting from sustained subscriber losses and an 18% fall in advertising revenue. The media giant remains on track to spin off its struggling AOL unit by December 2009.

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