Time Warner to report loss as economy hurts advertising

New York: Time Warner Inc will report a loss for 2008 after writing down the value of its cable, publishing and internet assets by about $25 billion in the fourth quarter. The shares fell as much as 7.4 per cent.

The economy has hurt advertising at the AOL and publishing units more than anticipated, the world's largest media company said yesterday in a statement.

An unfavourable verdict against Turner Broadcasting System and the bankruptcy of a tenant in the Time & Life building also contributed to the writedown.

"It's a little startling they didn't have a handle on this decline in advertising," said Fred Moran, a Boca Raton, Florida- based analyst with Stanford Financial Group. "The trends were readily available, so this downward adjustment is definitely surprising."

The recession and falling consumer confidence have compelled companies to cut marketing. TNS Media Intelligence issued a report December 11 saying US ad spending fell 1.7 per cent through September.

Even as the internet unit is attracting more users, advertising sales are "disappointing", Chief Executive Officer Jeffrey Bewkes said last month at a conference in New York.

New York-based Time Warner now anticipates a loss for 2008 after forecasting a profit from continuing operations of as much as $1.07 a share in November.

That projection was itself a reduction of a previous earnings outlook of as much as $1.11 a share. Analysts in a Bloomberg survey expected profit of $1.06.

Time Warner fell 71 cents, or 6.5 per cent, to $10.27 at 9:44 am in New York Stock Exchange composite trading after earlier slipping as low as $10.17. They lost 39 per cent of their value last year.

Excluding depreciation and amortization, adjusted operating income rose about 2 per cent last year from a 2007 base of $12.9 billion, down from the 5 per cent previously forecast.

The revised forecast comes just one month after Bewkes was named chairman, replacing Richard Parsons.

In 2007, AOL accounted for 11 per cent of revenue at New York-based Time Warner, down from 17 per cent the year before.

Time Warner Cable Inc, the second-biggest US cable operator, said yesterday it expects to record a pretax charge of about $15 billion and a loss for last year.