Time Warner's AOL and Time Inc. divisions continue to eat into its bottom line, as the media conglomerate posted third-quarter net income of $661 million, or 55 cents a share, a 38 percent decline versus its year-ago profit of $1.07 billion, or 89 cents a share.
Consolidated revenue fell 6 percent to $7.14 billion.
AOL's ad sales revenue fell 18 percent versus the year-ago period, while subscription dollars dropped another 29 percent. Both declines contributed to the loss of half of the unit's operating income, which totaled $134 million. AOL now serves 5.4 million subscribers, down 28 percent from 7.5 million a year ago. The unit's subscription losses accounted for more than half of the company's overall revenue decline.
TW is on track to spin off AOL before the end of the year.
Time Inc.'s Q3 ad sales dropped 22 percent to $456 million, although the magazine unit did show some sequential improvement. In Q2 '09, ad sales fell 26 percent.
On the other side of the ledger, the cable networks continued to serve as TW's load-bearing wall, as the programming segment upped operating income 3 percent to $938 million. Network revenue grew 5 percent to $2.87 billion, on a 9 percent increase in subscription/affiliate dollars ($1.89 billion).
Global ad revenue for the networks -- which include TNT, TBS and CNN -- dropped 1 percent from a year ago to $768 million, up from a 3 percent drop in Q2 '08. TW did not break out domestic ad sales figures, although CFO John Martin told investors that stateside business was up "in the low-single digits" versus the year-ago period. (In Q2 '09, the Turner nets boosted ad sales by 5 percent.)
TW said its network ad sales business was offset by weakened demand at its news networks, which include CNN and Headline News. In Q3, CNN's prime-time deliveries plummeted 30 percent, as the news net averaged 949,000 nightly viewers versus the year-ago period. CNN also dropped 38 percent among the core news demo, averaging 288,000 adults 25-54.
Ratings declines are partly a function of comparing this year's deliveries versus the inflated gains of Q3 2008, when the run-up to the presidential election lifted all boats.
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