Time Warner Closes In on Debt Reduction Goal

Time Warner Inc. said Monday that it would come close to meeting its two-year debt reduction target a year ahead of schedule and would focus on investing for growth in 2004.

Chief Financial Officer Wayne Pace said at an investor conference that the company expected its net debt to be $20.5 billion at the end of 2003, down from $24.1 billion at the end of the third quarter. Net debt equals total debt minus cash and cash equivalents.

The media giant had originally aimed to cut its net debt to $20 billion by the end of 2004, a target Pace repeated Monday. At the end of last year, net debt was $25.8 billion.

“We will shift our focus from deleveraging our balance sheet to investing in growth” in 2004, Pace told investors.

In the last two years, Time Warner had been criticized for its rising debt load and its failure to deliver on the promise of combining the new-media business of America Online with the company’s traditional film, music and publishing operations.

But in recent months, the company has made several moves to cut its debt, most recently agreeing to sell its Warner Music Group to an investment group headed by Edgar Bronfman Jr. for $2.6 billion. The company also recently sold its 50% stake in Comedy Central to Viacom Inc. for $1.23 billion and its CD and DVD manufacturing business to Cinram International Inc. for $1.05 billion.

Pace said Time Warner expected operating income, excluding depreciation and amortization, at its America Online unit to rise at least 10% in 2004, boosted by improvements in advertising revenue and its fledgling paid-search business.

Meeting the forecast would represent a turnaround for the AOL unit, which has seen its membership shrink on competition from high-speed services from cable and telephone firms.

The company’s Time Warner Cable unit separately said it forged a deal with telecommunications operators Sprint Corp. and MCI to deliver nationwide Internet-based phone service.

Time Warner also repeated its 2003 target of mid-single-digit percentage growth in overall revenue and operating income.

Time Warner shares rose 8 cents to $16.49 on the New York Stock Exchange.