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Cable Operators

Cable Results Drive Time Warner

2/04/2005 6:04 AM Eastern

Time Warner Inc. reported earnings growth of 76% in the fourth quarter, fueled by strong performance at its cable operations and networks.

Earnings for the period were $1.13 billion (24 cents per share) compared to $639 million (14 cents per share) in the prior year.

Revenue for the period was up 2% to $11.1 billion and operating income before depreciation and amortization (OIBDA) rose 3% to $2.4 billion.

Fueling that growth was strong performance at its cable operations — revenue at Time Warner Cable increased 10% to $2.2 billion and OIBDA rose 11% to $887 million. Driving the cable division’s gains were increases in digital video subscribers (up 124,000 in the period) and high-speed data customers (up 197,000 in the quarter). While basic video customers declined by 14,000 in the fourth quarter, Time Warner Cable did show strong increases in new products. The MSO added 153,000 digital-video-recorder customers in the period, finishing the year with 862,000 DVR subscribers. Subscription video-on-demand subscribers also increased by 171,000 in the period, ending the year at 1.5 million customers.

On the telephony front, Time Warner Cable said it ended the year with 220,000 subscribers to its voice-over-Internet protocol product.

At for its cable and broadcast networks, revenue increased 6% to $2.3 billion and OIBDA rose 10% to $663 million.

In a conference call with analysts, Time Warner chairman and CEO Richard Parsons said that the strong performance in 2004 was evidence that the media giant has turned the corner.

“The company has settled down,” Parsons said. “We are now operating a fully settled down Time Warner.”

Time Warner issued guidance for 2005, predicting that adjusted OIBDA would grow in the high single digits and expects to convert 30% to 40% of adjusted OIBDA into free cash flow (cash flow after interest payments and capital expenditures are made).

Parsons also confirmed that Time Warner and Comcast have made a joint bid for Adelphia Communications Corp., but could not get into details because of confidentiality agreements bidders were required to sign.

“I can confirm we are in the hunt [for Adelphia], we’re working with Comcast and we’re very excited about the possibility of that transaction,” Parsons said. “But it’s still early days. Stay tuned.”

September