TIME WARNER Q3 PROFIT UP
AS MUSIC SAGS

Time Warner, having recently dropped the “AOL” from its name, this morning reported third-quarter earnings of $541 million, or 12 cents a share, compared with $57 million, or one cent per share, a year earlier, thanks to increases at its network and cable TV divisions.

Music and America Online, however, suffered losses. Warner Music Group saw third-quarter operating income drop from $22 million a year earlier to a loss of $1 million. Revenue for the quarter dipped to $958 million from $983 million in 2002.

For the first nine months, WMG has suffered an operating loss of $9 million, compared to operating income of $71 million a year ago. Revenue for the period, however, increased slightly to $3.90 billion from $3.83 billion a year earlier.

The company says the decreases were “driven mainly by lower new release and catalog sales, reflecting declines in the worldwide recorded music industry.”

AOL, meanwhile, saw a 5 per cent drop in revenues to $2.11 billion for the quarter, thanks to falling advertising sales and subscriber numbers. Operating income dropped to $150 million from $161 million a year earlier. For the first nine months, AOL revenue is $6.44 billion, down from $6.77 billion in 2002. Similarly, operating income is $554 million, down from $609 million a year ago.

In other Time Warner news, the New York Times reports that the SEC has subpoenaed former AOLTW Chairman Steve Case and current TW Chairman/CEO Richard Parsons, as well as other executives, as part of its ongoing investigation into AOL’s dealings with Bertelsmann and possible accounting irregularities arising from the two comapanies’ ties.