Time Warner Inc., the world’s largest
media company, said third-quarter profit fell 7.8 percent after
setting aside $500 million to resolve investigations into the
accounting for advertising sales at America Online.
Net income declined to $499 million, or 11 cents a share,
from $541 million, or 12 cents, a year earlier. Sales rose 5
percent to $10 billion, the New York-based company said in a
statement.
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The reserves may signal an end to a U.S. Securities and
Exchange Commission probe over whether the company improperly
booked $400 million in sales to Bertelsmann AG. Chief Executive
Richard Parsons has been seeking to resolve the matter stemming
from America Online Inc.’s 2001 purchase of Time Warner Inc.,
which pared more than two-thirds of the company’s market value in
the last three years.
“It’s clearly a sign of Dick Parsons being aggressive in
trying to clean up the problems of the prior administration,”
said Peter Jankovskis, director of research at Oakbrook
Investments LLC of Lisle, Ill., which owns Time Warner shares
among its $1.2 billion in assets. “The fact that he’s moving
forward and getting this behind him is a good move.”
Profit excluding the cost of the legal reserve and other
gains was $722 million, or 15 cents a share. Time Warner was
expected to earn 14 cents on that basis, according to 25 analysts
surveyed by Thomson Financial.
Sales grew in every Time Warner unit in the quarter, led by
a 10 percent gain at the cable-television business. The company’s
cable-TV networks and publishing division increased revenue 8
percent and 3 percent, respectively. America Online and the film
unit boosted sales 1 percent each.
Bloomberg News
