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(July 18, 2001) -- AOL Time Warner reported record second-half earnings, but continued to show troubling pockets of weakness in its entertainment and publishing operations.

Total revenue for the quarter rose 3% to $9.2 billion, from $8.9 billion during the same time last year, and earnings rose 20% to $2.5 billion. Revenues for the first six months grew 6% to $8.3 billion and earnings for the first half of 2001 also grew 20% to $4.7 billion. Figures for 2000 have been restated to adjust for the January 2001 merger of America Online and Time Warner.

Among the troubling numbers is a weak 1% increase in revenue for advertising and commerce for the quarter to $2.3 billion. AOL Time Warner executives blamed the advertising slowdown for weak first-half results in the publishing division.

Among individual units, America Online and Time Warner Cable continued to produce strong results thanks to increased subscription revenue, while the music and filmed entertainment units continued to show weakness.

Music revenue dropped 11% to $895 million from $1 billion in 2000, and publishing revenue dropped to $1.19 billion from $1.2 billion in 2000; music division earnings were also down for the quarter, to $87 million from $129 million, but publishing earnings rose to $271 million from $224 million.

Music was also the only unit to show lower revenues year-to-date, $1.78 billion vs. $1.94 billion last year, and the unit's earnings dropped to $181 million from $230 million; the company blamed low sales and currency rates.

Filmed entertainment revenue rose to $4.12 billion from $3.7 billion, but earnings dropped to $363 million from $398 million for the first half. -- Mercedes Cardona

Copyright July 2001, Crain Communications Inc.

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