Time Warner to report loss after $25 billion charge

Media company Time Warner Inc. said Wednesday that it expected a fourth-quarter charge of $25 billion to write down the value of its cable, publishing and AOL assets, leading to a loss for the year.

New York-based Time Warner said its results, particularly for its AOL and publishing assets’ advertising operations, had been pressured by economic conditions that were more difficult than it initially anticipated.

Time Warner’s cable television arm, Time Warner Cable Inc., will account for $15 billion of the charge, with the remaining $10 billion related to its publishing and AOL divisions, spokesman Edward Adler said, declining to give further specifics.

The steep charge will lead to an operating loss for the fourth quarter. Time Warner also anticipates a full-year loss, down from a prior outlook for a profit of $1.04 to $1.07 a share.

Analysts polled by Thomson Reuters predict 2008 earnings of $1.08 a share. Analysts’ estimates typically exclude one-time items.

Time Warner’s stock dropped 69 cents, or 6.3%, to close at $10.29. The shares have ranged from $7 to $16.90 over the last year.

In addition to the $25-billion impairment charge, Time Warner Inc. anticipates a charge of about $280 million related to a December judgment against Turner Broadcasting System for the 2004 sale of its winter sports teams, and a $50-million to $60-million charge for a lease restructuring for space at New York’s Time & Life Building held by Lehman Bros. Holdings Inc., which filed for Chapter 11 bankruptcy protection in September.

Time Warner, which also owns the CNN cable network and the Warner Bros. film studio, said it thought there were “strong grounds” to have the verdict in the Turner Broadcasting case set aside by the trial court or overturned during an appeal.

The company also expects it will boost reserves by about $40 million for possible credit losses related to some customers that have declared bankruptcy, including Circuit City Stores Inc. and Woolworths in Britain, Adler said.

Despite the hefty charges, analysts seemed relatively unfazed. Wunderlich Securities Inc.’s Martin Pyykkonen called the fourth-quarter charges substantial but noted that they were non-operating items.

Time Warner Cable is set to be spun off this year. It expects a noncash impairment charge of $15 billion on its cable franchise rights in the fourth quarter, resulting in a loss for 2008.