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Aug 6, 2008

Time Warner Profit Drops on AOL, Magazine Ad Revenue

Time Warner Profit Drops on AOL, Magazine Ad Revenue (Update3) 

By Gillian Wee

Aug. 6 (Bloomberg) -- Time Warner Inc., the world's largest media company, said second-quarter profit dropped 26 percent on lower earnings from the AOL Internet unit and Time Inc.'s magazines.

Net income fell to $792 million, or 22 cents a share, from a year earlier, when tax benefits and the sale of a books business boosted results, New York-based Time Warner said today in a statement. Sales rose 5.2 percent to $11.6 billion, topping the $11.4 billion average estimate.

AOL dragged on the results with the loss of 604,000 Web- access subscribers, and Time Inc. reported a 9 percent drop in advertising revenue. The addition of 251,000 phone customers at Time Warner Cable Inc. helped drive sales growth, along with revenue increases at the TV networks and the Warner Bros. film studio. Overall operating profit was little changed.

``AOL and publishing came up a little bit short,'' said Chris Marangi, a fund manager at Gamco Investors Inc. in Rye, New York, which owned 11.7 million Time Warner shares as of March 31 among its $28 billion in assets.

Ad sales at AOL rose 2 percent to $530 million, missing Marangi's 3 percent estimate. The unit's third-party ad network and revenue from a partnership with Google Inc. offset a 14 percent drop in display ads that appear on Web sites.

Difficulties in integrating acquisitions also hurt AOL's results, Time Warner Chief Executive Officer Jeffrey Bewkes said today on a conference call...

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