NEW YORK (CNN/Money) -
Time Warner chairman and CEO Richard Parsons promised investors that the media giant would have a strong year and added that results for its struggling AOL unit bottomed in 2003.
Parsons, speaking at the Smith Barney Entertainment, Media and Telecommunications Conference in Phoenix, said the company's operating income should increase in all of its business lines, with the exception of filmed entertainment.
Time Warner's New Line Cinema division had an extremely successful year, with the release of "The Return of the King," the final installment of the "Lord of the Rings" trilogy, as well as the unexpected success of the holiday comedy "Elf."
"New Line is having such a blow out year in 2003 that it's impossible to repeat going forward," Parsons said. However, Parsons noted that the company's Warner Brothers division should have a solid year in 2004, with high hopes in particular for the third Harry Potter film, "Harry Potter and the Prisoner of Azkaban," as well as "Catwoman," starring Halle Berry.
Parsons also pledged that the company's AOL division, which has suffered from a downturn in online advertising and slowing subscriber growth, would perform better in 2004. "AOL remains highly profitable. It funds itself and generates a billion (dollars) in free cash flow annually. We believe AOL's results bottomed in 2003," Parsons said.
Parsons said that he expected online advertising revenue to increase this year, led primarily by paid search advertising. AOL has a partnership with search engine Google to share revenue from so-called paid searches, which allow advertisers to sponsor certain keyword searches.
Consolidation in cable
The company, which operates the second largest cable company in the U.S., will remain a key focus for Time Warner, Parsons said. He said that Time Warner hopes to have voice over Internet protocol (VoIP) telephone services available to all its cable customers by year-end.
In addition, Parsons said that the cable sector is ripe for consolidation and that Time Warner would be looking for possible deals. "We're believers in cable and we'd like to participate in consolidation at the right price.," Parsons said.
Shares of Time Warner (TWX: Research, Estimates) were relatively unchanged in mid-morning trading Tuesday on the New York Stock Exchange. Time Warner is the parent company of CNN/Money.