February 5, 2009
Time Warner Announces Fourth Quarter Losses
United States media giant Time Warner announced it expects profits to remain flat for 2009, as the firm reels from a $16 billion fourth-quarter loss.
Time Warner says the enormous loss stems from a major write-down that it disclosed last month to account for the decline in value of two struggling units including America Online and Time Inc., which publishes Sports Illustrated, Time, Fortune and People.The only division that experienced fourth quarter revenue growth was the company's cable networks that include HBO, TNT, TBS and CNN. Revenue at the unit increased 9 percent, to $2.9 billion, over the year.
The other 3 units "” AOL, Time Inc. and Warner Brothers"” all posted revenue declines for the year and the quarter.
Meanwhile, Time Warner Cable said it lost $8.2 billion in the fourth quarter and would lay off 1,200 people. Time Warner retains an 85 percent stake in Time Warner Cable.
Time Warner lost $4.47 a share in the fourth quarter compared with a profit of $1.03 billion, or 28 cents a share, in 2008.
Stock in New York based Time Warner fell 36 cents, or 3.7 percent, to $9.42 a share.
Last year, Time Warner took a $24.2 billion write-down last year, which included $14.4 billion allocated to the cable unit, $2.2 billion to AOL, and about $7.6 billion to Time Inc.
Jeffrey L. Bewkes, the company's chief executive, said Time Warner was "well positioned relative to the rest of the industry."
That's compared with the Walt Disney Company who reported lower-than-anticipated earnings. The News Corporation, another of Time Warner's competitors, will report earnings on Thursday, and a multibillion-dollar write-down is expected.
Bewkes also said that the state of the economy had resulted in "the most uncertainty and the least visibility" in memory.
He said despite the sluggish economy, Time Warner earned 66 cents a share last year and the results for 2009 should be about the same.
But the company acknowledges there is little certainty in business trends for the foreseeable future.
"It's incredibly tough to make decisions right now," said John K. Martin, Time Warner's chief financial officer.
Advertising at AOL was down 18 percent, or $113 million, in the period, and at Time Inc. was down 20 percent, or $158 million.
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