Time Warner Q1 profit goes flat, despite modest growth

Despite a modest increase in overall revenue, Time Warner on Wednesday said its first-quarter profits were flat compared to the same period last year.

Time Warner’s first-quarter revenue was $10.5 billion, up 3 percent from the same period last year when the company reported revenue of $10.2 billion.

However, that modest increase in revenue didn’t translate into higher profits for the company. Time Warner reported its net income for the period was $963 million, a gain of less than 1 percent over the year-ago period.

Time Warner’s AOL Internet division had a tough quarter, with a drop in the number of domestic subscribers dragging the group’s revenue down by 3 percent to $2.1 billion.

AOL had 21.7 million Internet subscribers as of March 31, 2.3 million fewer than the same period last year, Time Warner said. As a result, AOL’s revenue from subscriptions was down by 8 percent compared to last year. However, that drop was partly offset by an increase in advertising revenue, which increased due to rises in revenue from paid search and the acquisition of Advertising.com, the company said.

Despite lower revenue, AOL was more profitable during the first quarter of 2005 than it had been during early 2004. Operating income for the division rose 17 percent to $324 million, Time Warner said.

Time Warner’s Cable and Networks division both showed relatively strong growth during the first quarter. Cable revenue and operating income both rose 10 percent compared to the same period last year, Time Warner said. Revenue from the company’s Networks group rose 4 percent while operating income rose 7 percent, it said.

Looking ahead, Time Warner said that its outlook for the year remains unchanged. The company expects to see its adjusted operating income, which excludes depreciation costs and debt payments, to show growth in the high single digits. The company’s adjusted operating income for 2004 was $9.9 billion.