Lower ad revenues pull down Time Warner Q1 profit to $661mn

Media and entertainment group Time Warner Inc has reported 14 per cent decline in first quarter profit at $661 million, as the entity grappled with plunging advertisement revenues and lower DVD sales.

Time Warner, which owns well known brands like Time magazine and Hollywood studio Warner Bros, has posted a profit of $661 million for the first three months ended March 31, 2009, a fall of 14.3 per cent against the year-ago period.

The company had a profit of $771 million in the same period a year ago, it said in a statement.

In the first quarter, the group witnessed substantial drop in revenues at AOL, Publishing and Filmed Entertainment divisions.

At AOL, sales slumped 23 per cent to $867 million, primarily on account of steep falls in subscription and advertising revenues.

The group recorded revenues of $6.95 billion in the latest quarter against $7.47 billion in the comparable period.

"In the quarter, Revenues declined seven per cent from 2008 to $6.9 billion, due mainly to decreases at the AOL, Publishing and Filmed Entertainment segments, offset partially by an increase at the Networks segment," the statement noted.

According to the company, revenues in the Filmed Entertainment segment dipped 7 per cent to $2.6 billion, impacted by lower DVD sales.

This was driven by fewer home video releases and reduced catalog sales in the current year quarter, as well as the impact of unfavorable foreign exchange rates and reduced theatrical revenues, it added.

Regarding AOL, the statement noted that the fall in subscription revenues reflects mainly a continuing decrease in subscribers, related primarily to AOL's strategy to offer its e-mail and certain other products free of charge.

"Driving the decrease in advertising revenues were declines in sales of advertising on third-party Internet sites, as well as display advertising and paid-search advertising on AOL Network sites," it added.

In the Publishing Segment, revenues fell 23 per cent to $806 million, as advertisement sales plunged 30 per cent.

"The decline in Advertising revenues reflected decreases in print magazine revenues... As well as lower custom publishing revenues and declines in online revenues," it added.

"With our separation of Time Warner Cable, Time Warner has become a more content-focused company. We're also working to determine the right ownership structure for AOL," Time Warner's Chairman and Chief Executive Officer Jeff Bewkes said.