MUMBAI: Media giant Time Warner Inc. has reported a loss of $16 billion in its fourth quarter. The loss was incurred due to the asset impairments in its filmed entertainment, AOL, cable and publishing segments. The company sees fiscal 2009 adjusted earnings flat with last year, but sharply below market projections.
Time Warner’s fourth-quarter net loss was $16.03 billion or $4.47 per share, compared to a profit of $1.03 billion or $0.28 per share in the previous year quarter.
The company said that the latest quarter results were hurt by one-time costs of $16.85 billion, primarily due to noncash impairments to reduce the carrying value of goodwill and intangible assets, while prior-year results included costs of $35 million, mainly on investment losses.
Time Warner’s total fourth-quarter revenues declined three per cent to $12.31 billion from $12.64 billion in the previous year. The company attributed the decline to lower revenues at the filmed entertainment, AOL and Publishing segments, offset partially by increases at the Cable and Networks segments.
Filmed Entertainment (Warner Bros. Entertainment) recorded revenues of $3.1 billion, which was 11 per cent lower than last year. The current year quarter’s results also included $30 million in increased bad debt reserves for potential credit losses related to several customers that have recently filed for bankruptcy. Operating Income grew seven per cent to $271 million, due largely to higher operating income before depreciation and amortization.
The company’s Networks division comprising Turner Broadcasting and HBO saw quarterly revenues grow by nine per cent from last year to $2.9 billion, which were driven by seven per cent rise in subscription and advertising revenues each.
AOL revenues decreased 23 per cent year-over-year to $968 million, including declines of 27 per cent in subscription revenues and 18 per cent in ad sales revenues. In the Publishing division (Time Inc.) revenues fell 13 per cent to $1.3 billion, impacted by a 20 per cent fall in advertising revenues and nine per cent in subscription revenues.
Time Warner’s fourth-quarter operating loss was $22.2 billion, compared to the year-ago quarter’s operating income of $2.3 billion. Asset impairments were $2.2 billion at the AOL segment, $14.8 billion at the Cable segment and $7.1 billion at the Publishing segment. Adjusted operating income before depreciation and amortization decreased eight per cent to $3.2 billion.
The company expects fiscal 2009 adjusted income per share from continuing operations to be around flat with last year’s adjusted earnings per share of $0.66. The outlook reflects the impact of approximately $250 million in restructuring charges expected in 2009, which are related to restructurings at Warner Bros and AOL.
Time Warner chairman and CEO Jeff Bewkes said, "We’re making progress at Time Warner toward our goals of becoming a more content-focused company and delivering increasing returns to our stockholders. Last year, our priorities were to rationalize our structure and improve our operating performance. Despite the challenging economic environment, we achieved most of what we set out to do. Moving into 2009, we intend to build on these accomplishments. Operationally, we’ll continue to improve the efficiency of our businesses while creating even more of the compelling content that’s becoming increasingly valuable. Structurally, we’ll complete the Time Warner Cable separation soon. At the same time, we’ll strengthen our balance sheet, improve our strategic flexibility and return capital to our stockholders on a consistent basis. Through these steps, we expect to emerge from this downturn in an even stronger competitive position."