Time Warner Inc., the world’s largest media company, swung back to a profit in the fourth quarter of 2003 after reporting a $44.9 billion loss in the same period a year ago because of write-downs at its AOL unit, the company reported Wednesday.
Time Warner posted net earnings of $638 million, or 14 cents a share, in the three months ending in December, just shy of the 15 cents per share that analysts surveyed by Thomson First Call had been expecting. The year-ago net loss was equivalent to $10.04 per share.
Revenues rose 6 percent to $10.9 billion from $10.25 billion in the same period a year earlier, led by gains in its movie unit and cable TV business.
The company, whose vast holdings include the Time Inc. magazine family, HBO, CNN and AOL, said it expects earnings in each of its segments to grow faster in 2004 than last year, except for New Line cinema, which had a blockbuster year in 2003 with the latest “Lord of the Rings” movie.
Excluding the effects of write-downs and other one-time gains and losses, the company’s operating income edged lower to $2.39 billion from $2.43 billion in the same quarter a year ago. All segments posted stronger results except AOL and Networks, which includes CNN, HBO and TNT.
AOL remained a weak spot, as revenues declined 7 percent in the quarter. Operating earnings in the division swung back to a profit of $301 million compared with a loss of $33.14 billion a year ago due to the write-off.
AOL continued to lose subscribers in the quarter, but at a slower rate. Subscribers declined by a net 399,000, below the 688,000 it lost in the previous three-month period.
Time Warner excluded results from its music division, Warner Music Group, which it has agreed to sell to an investor group led by Edgar Bronfman Jr., the former head of Seagram Co.
After receiving the $2.6 billion in cash it expects to get from that deal, the company will reach its goal of reducing its overall debt to about $20 billion almost one year ahead of schedule. Time Warner’s debt stood at $25.8 billion at the end of 2002.
CEO Dick Parsons said the company was pleased with the results, particularly achieving its debt-reduction goals ahead of time. “Our company exited 2003 substantially stronger than when the year began, and we enter 2004 with a real sense of enthusiasm,” Parsons said.
Parsons has been working to slim the company down, reduce debt and regain the trust of Wall Street following the disastrous decline in its stock price after the merger with AOL, which was announced at the height of the Internet bubble in early 2000.
For the full year, net earnings were $2.64 billion or 57 cents a share, compared with a loss of $98.7 billion, or $22.15 a share, for all of 2002, which also included large write-offs to reflect declines in value since the AOL-Time Warner merger.
Adjusted operating earnings, which exclude one-time gains and losses as well as depreciation and amortization, rose 7 percent to $8.81 billion from $8.24 billion.
Annual revenues rose 6 percent to $39.57 billion from $37.31 billion.