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DOW JONES NEWSWIRES
Time Warner Inc.'s (TWX) third-quarter profit declined 38% as the shaky U.S. economy and shifting media landscape continue to weigh on the company's publishing, AOL and filmed entertainment units.
But the media giant topped analysts' expectations and raised its full-year earnings target to at least $2.05 a share, compared with a view initially given in April of about $1.98.
In premarket trading, Time Warner shares rose 2.8% to $31. The stock, which has nearly doubled from a low in March, is up up 35% for 2009.
The media industry is making a difficult shift to take advantage of digital media, while the global recession hampers its traditional revenue streams: advertising and consumer spending. But Tuesday, the chief executive at rival Viacom Inc. (VIA) noted demand was up and pricing was strong for television advertising heading into the holiday season, adding to an optimistic chorus from media executives.
Time Warner, with its eyes on being the top content provider across technologies, has been shuffling its broad portfolio of media properties, including the spinoff of its cable business earlier this year and the planned spinoff of Web media unit AOL. The company still expects to spin off AOL as a separate, publicly traded company by end of this year.
For the quarter ended Sept. 30, Time Warner posted a profit of $661 million, or 55 cents a share, down from $1.07 billion, or 89 cents a share. Earnings from continuing operations excluding items such as write-downs fell to 61 cents from 65 cents and surpassed the average analyst estimate of 53 cents a share on Thomson Reuters.
Revenue decreased 5.9% to $7.14 billion, slightly above the Thomson Reuters estimate of $7.08 billion.
Time Warner's publishing group saw a 40% decline in earnings and a 18% drop in sales. That segment has long been the topic of rumor of its future, including a potential sale, but Time Warner has repeatedly expressed its commitment to the business.
The company said Wednesday that the fourth quarter will include about $100 million of restructuring charges for its publishing arm. Last month, The Wall Street Journal reported plans - which weren't yet finalized - for a restructuring at the publishing group similar to the one last fall that pared more than 6% of Time Inc.'s work force, or more than 600 positions.
AOL revenue fell 23% as advertising sales slid 18%. U.S. dial-up subscribership was down 438,000 from the second quarter, putting the figure at 5.4 million.
Time Warner's television business, which includes Turner Broadcasting and HBO, posted 3.2% growth in earnings as revenue climbed 5.2% with about a 1% decline in ad revenue. Movie earnings rose 5.8%, while revenue was down about 4%.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; joan.solsman@dowjones.com