Revenue of $11.71 billion was slightly higher than the $11.68 billion reported in the third quarter of 2007. Net income was $1.07 billion, slightly less than the $1.09 billion reported last year. Time Warner shares rose 2% to $11.07 in morning trading.
At the same time, CEO Jeff Bewkes said only 20% of Time Warner's revenue is now derived from advertising. "Most of our revenue comes from our content and subscription businesses, which have historically been largely insulated from macroeconomic swings," he said.
Movies, cable hold up
Time Warner's filmed-entertainment and cable networks divisions performed well. Filmed-entertainment revenue was down 9% to $2.9 billion due to tough comparisons between the Batman sequel "The Dark Knight" and the last "Harry Potter" installment in 2007. TV-network revenue increased 7% to $42.7 billion, including 10% growth in subscription revenue from cable systems and 9% growth in advertising.
The trouble spots continue to be online and in print. Advertising revenue dropped 6% at AOL, driven by a 12% decrease in revenue from third-party display advertising at Platform A. Paid search was up 12%, due to increases in revenue per search query.
"The economy has had an impact on AOL's advertising business," Mr. Bewkes said. "In particular we have seen increasing weakness from certain advertising categories, specifically in mortgage finance and domestic autos."
No decision on AOL
In the earnings release, Mr. Bewkes reiterated his goal of making Time Warner "the industry's leading pure content company," but he refused to comment on the potential sale of AOL to Yahoo or Microsoft, subject of ongoing talks between the companies.
"We do think that we have adequate scale domestically in AOL, but we have said that if there was a strategic opportunity to put AOL on a stronger position, we would look at it closely," he said.
Revenue at Time Warner's publishing unit was down 7% to $1.1 billion, led by an 8% drop in ad revenue. Mr. Bewkes said the 6% reduction in Time Inc. staff would bring savings of $150 million in 2009.
Time Warner lowered its full-year outlook partly to reflect $100 million to $125 million in the fourth quarter for severance and other costs for planned job cuts in the magazine unit. It also cited a "challenging economic environment."
The company is now expecting a 5% annual growth rate in 2008, compared to a range of 7% to 9% growth predicted earlier this year. Full-year earnings per share will be $1.04 to $1.07 per share, down from $1.07 to $1.11 per share predicted earlier in the year.