Time Warner Posts Profit on Advertising, Music Gains

Time Warner Inc., the world’s largest media company, said it had a fourth-quarter profit on advertising gains at magazines such as People and on hit music from artists such as Alanis Morissette.

Net income was $90 million compared with $216 million a year earlier, as charges and gains in both quarters clouded otherwise strong results. Time Warner’s per-share loss of 17 cents, after preferred dividends, beat the average analyst forecast of 19 cents from First Call Corp. A year earlier, it earned 11 cents a share.

Time Warner showed growth across all of its major divisions, with cash flow rising 6% and the biggest gains coming in its music business, where a roster of hot-selling artists is extending a turnaround that began last quarter. TV production and syndication of shows such as “ER” offset softness at the Warner Bros. film studio, while cable networks HBO and TNT benefited from higher audience ratings and ad sales.

Revenue from Time Warner and its partnership with MediaOne Group Inc. rose 7% to $7.46 billion in the latest quarter, from $6.97 billion a year earlier.

Operating cash flow rose 6% to $1.37 billion, from $1.29 billion. On a pro forma basis, adjusting for swaps and sales of cable systems, cash flow rose 18%. Cash flow--which Time Warner defines as earnings before interest, taxes and amortization--is a key measure of the performance of indebted firms because it excludes interest payments. Time Warner ended the year with $16.5 billion of debt.

The latest results cap a strong year for New York-based Time Warner and Chairman Gerald Levin, who has overhauled the company’s balance sheet, improved its credit ratings and announced plans to buy back more shares.

Time Warner stock rose $2.81 to close at $64.06 on the New York Stock Exchange. It’s up 94% in the last 12 months, outpacing rivals such as Walt Disney Co. and News Corp., and some analysts said they expect it to go even higher.