Time Warner, Still Paying on Buyout, Loses $51 Million

Time Warner Inc. reported Monday that it lost $51 million in the second quarter on revenue of $2.59 billion, but four of the company’s six divisions posted increases in operating income.

The media and entertainment giant, which is amortizing more than $10.6 billion in debt from Time’s 1989 acquisition of Warner Communications, said operating income was $536 million for the period ended June 30.

Steven J. Ross, chairman and co-chief executive, and Nicholas J. Nicholas, president and co-chief executive, said they were “pleased” by the divisions’ strength. Operating income was defined as income before interest, taxes, depreciation and amortization.

The company reported depreciation and amortization expenses of $268 million and interest expenses of $261 million for the second quarter. The net loss for the first six months came to $102 million on revenue of $5.33 billion.

Several analysts said the quarterly report was generally in line with Wall Street’s expectations. “They came in slightly on the better side of most people’s estimates,” said Jeffrey Logsdon, analyst with Seidler Amdec Securities in Los Angeles.

Time Warner’s magazine division had lower operating income because of start-up costs associated with its Entertainment Weekly and the recession in the magazine industry. Operating earnings for the division were $85 million, compared to $99 million for the second quarter of 1989.

But the company said advertising and circulation revenue increased “marginally” over last year. Edward Hatch, an analyst with Nomura Securities in New York, said start-up expenses associated with Entertainment Weekly and other projects totaled about $12 million in the quarter.

Operating earnings from the filmed entertainment division were $75 million, compared to $61 million a year earlier. The company said Warner Home Video was a major contributor to those earnings.

The music division’s operating income rose to $125 million from $118 million, while the cable division’s operating income was $188 million, up from last year’s $160 million.

The Time Warner Programming-Home Box Office division posted operating profit of $46 million, compared to $43 million last year. Expenses from the introduction of the Comedy Channel hurt those results.

In the company’s book division, operating income was $17 million, down from $38 million last year. The decline was due primarily to Time Warner’s sale of the Scott, Foresman educational publisher last December, the company said.

For the other portions of the book division, operating earnings were roughly flat, officials said.