Media conglomerate Time Warner said today that fourth-quarter profit rose more than 30 per cent, boosted by asset sales, more digital cable and phone customers, and a rise in AOL advertising sales.
The company said it had established a $600 million legal reserve to deal with pending securities lawsuits. The owner of the Warner Brothers movie studio and HBO pay-cable network said net income rose to $1.75 billion, or 44 cents per share, from $1.3 billion, or 28 cents per share, a year earlier.
Excluding special items such as a $769 million gain on the sale of AOL's Internet access businesses in the United Kingdom and France, the company said its quarterly profit was 22 cents per share.
Revenue increased 8 per cent to $12.5 billion, narrowly beating Wall Street expectations of $12.35 billion.
Results benefited from an increase in broadband service and digital phone subscribers, sending cable division revenue up 58 per cent to $3.7 billion.
Operating profit for the division rose 46 per cent excluding items in the quarter. AOL revenue fell 8 per cent to $1.9 billion, dragged by restructuring charges and loss of dial-up Internet subscribers.
Operating income fell 10 percent. Time Warner shares have risen about 25 per cent in the past 12 months, boosted by an expansion of its cable operations with the purchase of some of Adelphia's cable assets and a overhaul of AOL's business model.
Time Warner's enterprise value, or its market capitalization plus debt, minus cash, is 9.4 times its estimated 2007 earnings before interest, tax, depreciation and amortization - a relative discount to rival media conglomerates News Corporation's 14.2 multiple and Walt Disney's 10.52 times.