Time Warner revenue rises

Largest media conglomerate posts earnings in line with forecasts as revenue tops target; reaffirms guidance and announces acquisition by AOL.

NEW YORK (CNNMoney.com) -- Time Warner, the world's largest media conglomerate, reported third-quarter earnings that met Wall Street expectations on better than expected revenue. The company also reaffirmed its outlook for the rest of the year and announced an acquisition by its online unit.

But Time Warner (Charts, Fortune 500) shares fell 2 percent in Frankfurt trading.

The company, whose holdings include television networks, movie studios, magazine publishers and AOL, as well as CNNMoney.com, reported revenue rose 9 percent to $11.7 billion, topping forecasts of $11.4 billion.

Looking at specific businesses, Time Warner reported a 13 percent increase in online advertising revenue at AOL, a decrease from the 16 percent growth reported in the second quarter. And the company's majority-owned Time Warner Cable (Charts) unit reported revenue and earnings per share that were lower than analysts' forecasts.

Overall for Time Warner, adjusted operating income before depreciation and amortization, an important measure of profitability for media companies, was $3.24 billion, roughly in line with the forecast of $3.23 billion, and up from $2.82 billion a year earlier. The company said that profits, based on this measure, should grow in the mid to high teens this year, in line with previous guidance.

Time Warner earned $900 million, or 24 cents a share, from continuing operations, excluding special items. That met the forecasts of analysts surveyed by earnings tracker Thomson First Call, although it was down from the $1.3 billion, or 33 cents a share, it earned on that basis a year earlier.

Earnings in the third quarter of 2006 were boosted by gains from asset sales. Excluding these gains, Time Warner reported a profit of 19 cents a share a year ago.

Net income fell to $1.1 billion, or 29 cents a share, from $2.3 billion, or 57 cents a share, a year earlier.

The company also announced that its AOL unit would purchase Quigo, an online advertising company that allows media companies to include contextually-based sponsored links in stories. (CNNMoney.com is a Quigo customer.) Terms of the deal were not announced; according to other reports, AOL is said to have paid $340 million for Quigo.

Earlier this week, Time Warner announced that chief operating officer Jeff Bewkes will succeed Richard Parsons as chief executive on Jan. 1. Parsons will continue as chairman.

Investors are eager to hear what Bewkes will say about the future of Time Warner since he is said to be more open to the idea of major restructuring than Parsons. Analysts have suggested that Bewkes may want to spin-off more of Time Warner Cable as well as the AOL division. Top of page