By Cecile Daurat
Thursday, February 1, 2007
Time Warner said yesterday that its fourth-quarter profit rose 34 percent, helped by the purchase of Adelphia Communications' cable-television unit and the sale of AOL's European businesses.
Time Warner chief executive Richard D. Parsons is now focused on reviving AOL, based in Dulles, which is offering free broadband service to attract users and advertisers. The stock has risen 35 percent in six months on optimism he will succeed.
"Cable continues to deliver the bulk of the free cash flow," said Tuna Amobi, an equity analyst at Standard & Poor's in New York. "There are still some challenges with AOL ahead. It's going to be testing year for AOL."
Profit increased to $1.75 billion, from $1.3 billion in the comparable period a year earlier. Sales increased 8.2 percent, to $12.5 billion.
Earnings were buoyed by a pretax gain of $769 million on the sale of AOL Web access units in France and Britain, as well as $900 million in tax benefits.
Despite losing a large portion of its subscriber base, Time Warner said, AOL saw its advertising revenue jump 41 percent last year.
A year after fending off a campaign from billionaire Carl C. Icahn to break up the company, Parsons, 58, is starting to reap the benefits of keeping the assets together. He implemented a $20 billion share buyback at Icahn's urging, helping boost per-share earnings. Revenue in 2006 rose 4 percent, to $44.2 billion, while profit more than doubled, to $6.6 billion.
Time Warner Cable, of Stamford, Conn., lured customers with packages of cable, high-speed Internet access and broadband services. About 1.5 million subscribers, or 10 percent of the total, subscribe to the so-called triple-play package. Additionally, the unit added 211,000 digital phone subscribers and 246,000 high-speed Internet access subscribers.
In July, Time Warner Cable acquired subscribers from Adelphia in a three-way deal with Comcast.