Time Warner to settle securities cases, posts loss

Aug 3 | Updated: Aug 4 2005, 06:17am hrs
Time Warner Inc, the worlds largest media company, posted a net loss of $321 million in the second quarter after agreeing to settle securities lawsuits related to accounting at the America Online unit. Sales fell for the first time in six quarters.

Time Warner had a loss of 7 cents a share, compared with a profit of $777 million, or 17 cents, a year earlier, the New-York based company said in a statement on Wednesday. Revenue fell 1% to $10.74 billion, missing the estimate of a 1% rise from 22 analysts surveyed by Thomson Financial.

Time Warner set aside $3 billion to resolve all the securities suits brought against it related to accounting issues America Online, the company said. Ending the civil cases will follow $510 million in settlements with the US government and free chief executive officer Richard Parsons, 57, to focus on selling shares in the companys cable unit.

"Theyve got to get this class action behind them," said Andrew Seibert, a fund manager at S&T Wealth Management in Pittsburgh, Pennsylvania, which doesnt own shares of the company. "I dont like seeing light revenue in any company I wish to purchase." Excluding some costs, earnings were 18 cents a share, missing the average estimate of 19 cents a share from 22 analysts.

Shares of Time Warner, which also owns the HBO cable network and Sports Illustrated magazine, yesterday rose 32 cents to $17.42 in New York Stock Exchange Composite trading. The shares have fallen 10% in 2005 as the Standard and Poors 500 Index has risen 2.7%. Revenue from Time Warners studios fell as movies failed to match the 2004 success of "Lord of the Rings" on home video and "Harry Potter" in theaters, according to analyst predictions.

Time Warner chief executive officer Richard Parsons is expanding the cable-systems unit, Time Warners fastest-growing unit, to benefit from demand for services including digital phone. Sales tickets of 2005 movies including "Monster-in-Law," with Jane Fonda and Jennifer Lopez, and "Batman Begins" werent enough to match last years releases "Harry Potter and the Prisoner of Azkaban" and "Troy." Time Warners studios werent the only ones to suffer. North American box-office sales are down 9.4% so far this year, according to BoxOfficeMojo.com, which tracks those numbers.

"Second quarter suffered from tough comparison," said Scott Benesch, an analyst at US Trust Co, which manages $103 billion of assets, including Time Warner shares.