But this morning many eyes were trained on the publishing unit. Time Inc. has spent months redirecting investment toward core products and digital platforms while cutting costs, mostly recently with another large round of job eliminations and the first big batch of asset sales. The stated goal is to position the country's biggest magazine publisher for the interactive era, but the pursuit of growth is another big motivator.
A $29 million decline
Time Inc. revenue declined $29 million, or 1%, to $5.2 billion during 2006, as a 2% increase in ad revenue was offset by a 7% decline in revenue from nonmagazine businesses and lower licensing revenue from AOL.
While revenue declined, the results still seemed to support Time Inc. Chairman-CEO Ann S. Moore's digital priorities and cost-containment drive. Ad revenue may have edged upward on the whole, but growth in online ad revenue was undermined by the decline in print-magazine ad revenue, the company said. Adjusted operating income, before depreciation and amortization, declined 3% to $1.1 billion.
"It remains the leading magazine publisher in the world in terms of readership and advertising share," said Time Warner Chairman-CEO Richard Parsons during a conference call. "Its digital strategy aimed at bringing those strong brands online is working."
AOL falls 5%
Other Time Warner divisions, facing challenges of their own, posted mixed results. Revenue at AOL, which switched last year from a subscription model to an ad-supported one, fell 5% to $7.9 billion. The company pinned that fall on the 14% decrease in subscription revenue but noted ad revenue grew 41%. Adjusted operating income before depreciation and amortization fell 3% to $1.8 billion.
"During the year we repositioned AOL as a primarily advertising-driven business and this strategic shift has already yielded strong financial results," Mr. Parsons said. "For the last nine months of the year, we believe our ad growth was faster than the industry average, which of course means that AOL was taking share for the first time in many years. Our new management team is totally focused on laying the groundwork for continuing this success."
The cable unit fared well, partly because of the acquisition of some cable systems from Adelphia Communications and other deals. Revenue shot up 34% to $11.8 billion and operating income before depreciation and amortization jumped 27% to $4.2 billion.
'Sopranos' sale helps
The Time Warner networks also improved, expanding revenue 7% to $10.3 billion on growth in subscription, advertising and content revenue. Content grew 7% primarily because of the sale of HBO's "The Sopranos" to domestic cable, even if syndication sales of "Sex and the City" fell. Adjusted operating income before depreciation and amortization rose 10% to $3.2 billion, reflecting higher revenue partly offset by rising expenses and the cost of shutting down The WB Network.
But the film division showed how hard it is to match a great year, like its record 2005. Revenue at Warner Bros. Entertainment and New Line Cinema fell 11% to $10.6 billion, while adjusted operating income before depreciation and amortization slipped 7% to $1.1 billion.