Time Warner reports 4th-quarter loss

The cable business will cut off 1,250 jobs.

LOS ANGELES (AP) — Media and entertainment giant Time Warner Inc. reported a fourth-quarter loss, hurt by a previously expected $24.2 billion writedown for its cable, publishing and AOL assets.

The company predicted flat earnings in the year ahead as it takes on major restructuring charges amid a declining advertising market.

“We’re considering that the tough advertising environment continues,” Chief Financial Officer John Martin told analysts on a conference call. “While it doesn’t assume any considerable improvement, it also doesn’t assume that things are going to get much worse.”

Its cable unit, meanwhile, also reported a loss and said it plans to cut 1,250 jobs, or about 2.6 percent of the unit’s work force, as its business slows. Time Warner owns 85 percent of Time Warner Cable and plans a spinoff of that interest.

The New York-based company, which owns Time magazine, cable networks CNN and HBO and the Warner Bros. movie studio, posted a loss of $16.03 billion, or $4.47 per share, in the three months to Dec. 31. That compared with a profit of $1.03 billion, or 28 cents per share, a year ago.

Quarterly results were dragged down $4.70 per share mostly due to the $24.2 billion writedown.

Time Warner had anticipated the writedown, predicting in January it would record an operating loss for the fourth quarter and the full year. Excluding the writedown, adjusted earnings were 23 cents per share. Revenue dipped 3 percent to $12.31 billion from $12.64 billion.

Analysts polled by Thomson Reuters forecast earnings of 26 cents per share on revenue of $12.71 billion. Analysts’ estimates typically exclude one-time items.

Martin said Time Warner predicted flat earnings per share in 2009, compared with profit of 66 cents per share in 2008, adding that “it could swing a few pennies in either direction.”

The outlook excludes the Time Warner Cable business, which will soon be spun off, but includes a charge of $250 million to cover restructuring at AOL and Warner Bros.

Those units last month announced cuts of 700 jobs and 800 jobs respectively to cope with the weak economy. Cuts at AOL are expected to save $250 million annually starting this year, while the $100 million charge at Warner Bros. was expected to pay for itself in 2010 and 2011.

At AOL, revenue slid 23 percent to $968 million as subscription revenue tumbled 27 percent and ad sales dipped 18 percent. The company ended the year with 6.9 million Internet-access subscribers, down 573,000 from September.

Chief Executive Jeffrey Bewkes said Time Warner continued to be open to merging or selling off its AOL division.

“AOL management is pretty flexible and aggressive about looking at any opportunity to strengthen their position, whether it’s in combination with somebody or not,” he said.

The company also said it was evaluating its options after Google Inc. requested late last week to exercise special rights on its 5 percent stake in AOL, which it bought for $1 billion in 2005. The move could force Time Warner to buy back the shares, or spin off the Google stake in AOL to the public. It could also delay a decision “for some time,” the CFO Martin said.