- The Washington Times - Wednesday, November 2, 2005

NEW YORK (AP) — Time Warner Inc., the world’s largest media company, reported an 80 percent increase in third-quarter earnings yesterday and raised its stock-repurchase program to $12.5 billion from $5 billion in an effort to meet shareholder demands to lift its slumping stock price.

Shareholders have been clamoring for Time Warner to take steps to lift its moribund share price, which is still about 75 percent below the levels it saw before agreeing to be bought in early 2000 by AOL. That deal resulted in shareholder lawsuits, regulatory scrutiny and a management purge.

The New York-based company, whose properties include the Warner Bros. studio, HBO, CNN, a major cable TV company and Time magazine, posted net earnings of $897 million versus $499 million in the same period a year ago.

Per-share earnings came in at 19 cents compared with 11 cents a year ago. Analysts polled by Thomson Financial were expecting a profit of 17 cents per share.

Revenue rose 6.1 percent to $10.54 billion from $9.94 billion.

At the same time, the company also announced that its board of directors had approved an increase in its share-buyback program to $12.5 billion over the next 21 months, up from the previous level of $5 billion.

Time Warner’s shares rose 33 cents, or 1.9 percent, to $17.90 in early trading on the New York Stock Exchange.

The third-quarter gains were driven by strong showings in cable TV, which benefited from customers signing up for more premium services like high-speed Internet and digital phone, and cable networks, which had gains from the syndication of HBO’s “Sex and the City” and higher advertising.

Activist shareholder Carl Icahn has been pressuring Time Warner’s management to take dramatic measures to boost its share price, including completely spinning off its cable TV division and raising the stock-buyback program to $20 billion. He has also criticized the fact that several directors who approved the disastrous AOL deal remain on the board. AOL’s co-founder Steve Case, a key architect of the deal who later become a target for critics, resigned from the Time Warner board on Monday.

Time Warner already plans to spin off 16 percent of its cable company, and has disagreed with Mr. Icahn’s suggestion to spin off the entire unit. Time Warner has said its current top priority is turning around AOL’s fortunes, but at the same time said it was considering other steps to return value to shareholders. Mr. Icahn didn’t return a call seeking comment.

Revenue at AOL declined 5 percent in the quarter on a 10 percent decline in revenue from subscriptions, which more than offset a 28 percent rise in online advertising. AOL lost another 678,000 subscribers in the period, ending the quarter with 20.1 million U.S. members. However, earnings rose 16 percent on lower network and marketing costs.

AOL was long seen as a drag on Time Warner because of the steady decline of the dial-up Internet access business, but in recent months AOL has been successfully revamping its business model, moving away from the subscription business and selling more online advertising, as do investor favorites Google Inc. and Yahoo Inc. AOL is now the subject of acquisition talks with those and other suitors.

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