Time Warner Profit Drops 34% on Tumbling Ads at AOL, Magazines

Time Warner Inc., owner of the Warner Bros. film studio, said second-quarter profit fell 34 percent on declining advertising sales at its AOL and publishing divisions.

Net income dropped to $519 million, or 43 cents a share, from $792 million, or 66 cents, a year earlier, the New York- based company said today in a statement distributed by Business Wire. Excluding some items, earnings of 45 cents a share exceeded the 37 cent average of analysts’ estimates in a Bloomberg survey.

The recession continued to hurt ad sales at AOL and Time Warner’s magazines, offsetting rising revenue at the cable networks, which include CNN and TBS. Chief Executive Officer Jeffrey Bewkes plans to spin off AOL this year, unwinding a failed 2001 merger and removing a drag on the company’s profit.

Time Warner fell 59 cents to $27.01 yesterday in New York Stock Exchange composite trading. The shares have increased 21 percent this year.

Time Warner said in a regulatory filing this week that it bought back Google Inc.’s 5 percent stake in AOL on July 8 for $283 million, a fraction of the $1 billion Google paid in 2005.

Warner Bros. unit received court approval July 1 to buy most of the assets of Midway Games Inc., the bankrupt creator of the “Mortal Kombat” video-game series. Time Warner offered $33 million for most of the U.S. assets, including development studios in Chicago and Seattle.

Viacom Inc., the owner of the MTV cable-TV network and the Paramount Pictures film studio, reported yesterday that second- quarter profit dropped 32 percent, and said there are signs the U.S. advertising market is improving. Viacom, based in New York, said its cable networks have sold most of their advanced advertising spots at acceptable prices. link.....