Time Warner 3Q profit drops, boosts outlook

NEW YORK -- Media conglomerate Time Warner Inc. reported a 38 percent drop in third-quarter profit, hurt by declines at its AOL and publishing segments.

But the results beat expectations and the company is boosting its full-year earnings forecast.

The media company, based in New York, said it is still on track to spin off its struggling AOL unit. Its shares rose 2.7 percent to $31 in premarkt trading.

Time Warner, which also owns the Warner Bros. movie studio and the HBO and Turner cable networks, said Wednesday its profit fell to $661 million, or 55 cents per share, in the July-September quarter, down from $1.1 billion, or 89 cents per share, a year ago.

Excluding unusual items, earnings came to 61 cents a share. That tops the analysts' average forecast of 53 cents, according to a survey by Thomson Reuters.

Last year's earnings included results from Time Warner's spun-off cable unit, Time Warner Cable Inc. Earnings from continuing operations fell a more modest 14 percent.

Revenue fell 6 percent to $7.1 billion, in line with analysts' estimates, from $7.6 billion a year ago.

The company expects adjusted earnings of at least $2.05 per share for the year, up from its earlier forecast of $1.98. Analysts expect earnings of $2.02 a share.

The AOL unit saw a 23 percent drop in revenues in the latest quarter. AOL ended the quarter with 5.4 million dial-up subscribers, down 438,000 from the quarter before.

Revenue at Time Warner's publishing operations, which include Time Inc. magazines such as Sports Illustrated and Fortune, dropped 18 percent as advertising sales continued to suffer.

Time Warner's movie studio and cable channels, which rely less on ad dollars, faired better.

Network segment revenue climbed 5 percent. Filmed entertainment revenue slipped 4 percent, but the unit's operating profit was up 6 percent.