Los Angeles: Media and entertainment giant Time Warner Inc. reported a fourth-quarter loss, hurt by a previously expected $24.2 billion writedown for its cable, publishing and AOL assets.
The company predicted flat earnings in the year ahead as it takes on major restructuring charges amid a declining advertising market.
“We’re considering that the tough advertising environment continues,” Chief Financial Officer John Martin told analysts on a conference call. “While it doesn’t assume any considerable improvement, it also doesn’t assume that things are going to get much worse.”
Shares fell 18 cents, or 1.8%, to $9.60 in midday trading.
The New York-based company, which owns Time magazine, cable networks CNN and HBO and the Warner Bros. movie studio, posted a loss of $16.03 billion, or $4.47 per share, in the three months to 31 December. That compared with a profit of $1.03 billion, or 28 cents per share, a year ago.
Quarterly results were dragged down $4.70 per share mostly due to the $24.2 billion writedown.
Time Warner had anticipated the writedown, predicting in January that it would record an operating loss for the fourth quarter and the full year.
Excluding the writedown, adjusted earnings were 23 cents per share.
Revenue dipped 3% to $12.31 billion from $12.64 billion.
Analysts polled by Thomson Reuters forecast earnings of 26 cents per share on revenue of $12.71 billion. Analysts’ estimates typically exclude one-time items.
Martin said Time Warner predicted flat earnings per share in 2009, compared with profit of 66 cents per share in 2008, adding that “it could swing a few pennies in either direction.”
The outlook includes a charge of $250 million to cover restructuring at AOL and Warner Bros., units that last month announced cuts of 700 jobs and 800 jobs respectively to cope with the weak economy. Cuts at AOL are expected to save $250 million annually starting this year, while the $100 million charge at Warner Bros. was expected to pay for itself in 2010 and 2011.
At AOL, revenue slid 23% to $968 million as subscription revenue tumbled 27% and ad sales dipped 18%. The company ended the year with 6.9 million Internet-access subscribers, down 573,000 from September.
Chief Executive Jeffrey Bewkes said Time Warner continued to be open to merging or selling off its AOL division.
“AOL management is pretty flexible and aggressive about looking at any opportunity to strengthen their position, whether it’s in combination with somebody or not,” he said.
Time Warner Cable revenue rose 8% to $4.4 billion, while filmed entertainment revenue dropped 11% to $3.1 billion, despite the smash success of “The Dark Knight,” which was released to the home video market in December.
Time Warner is nearing completion of the Time Warner Cable spinoff, which it anticipated would close in the first quarter. The cable company will pay a one-time dividend of $9.25 billion to Time Warner.
The move is expected to help the remaining company better focus on its strengths in content, especially if it can also shed all or part of AOL, acquired as part of AOL’s $106 billion purchase of Time Warner in 2001.
Time Warner Cable said Wednesday it is laying off 1,250 people over the next few weeks in the face of slowing growth, a move it expects will save $90 million a year.
Revenue from Time Warner’s networks, which include HBO and Turner Broadcasting, climbed 9% to $2.9 billion.
The publishing division reported a 13% decline in revenue to $1.3 billion, primarily pulled down by a 20% drop in ad sales.
For the year, the company reported a loss of $13.4 billion, or $3.74 per share, compared with profit of $4.39 billion, or $1.17 per share, in the previous year.