AOL Time Warner reported second-quarter net income of $394 million vs. a net loss of $734 million a year earlier. After factoring out accounting changes, income was down 33.5% from $592 million in 2001. Revenue increased 10% to $10.6 billion.
The America Online unit was the worst performer, with revenue down 3% and ad/commerce revenue down 42%; subscription revenue rose 20%, helped by price increases. (See stories, P. 3.)
Company ad/commerce revenue was down 11% for the quarter, but excluding AOL, total ad and commerce revenue was up 2%, said Chief Financial Officer Wayne Pace. The Time Inc. magazine unit posted revenue increases in the low single digits in May and June.
Intracompany ad/commerce sales-one division running ads for another-jumped 62% to $136 million. Divisions report that revenue, though AOL Time Warner excludes it from total company revenue; these house ads were equivalent to 6.6% of second-quarter ad/commerce revenue.
Omnimedia posted net income up 29.6% to $6.7 million and revenue up 15.9% to $78.6 million thanks to strong results from publishing and merchandising units, where revenue rose 15.3% and 81.6%, respectively. Chief Financial Officer James Follo said he could not offer investors fourth-quarter guidance due to uncertainty created by scrutiny of Chairman-CEO Martha Stewart's stock trades. (See story, P. 4.)
Viacom executives took shots at rivals as they announced second-quarter net income of $546.5 million, up from $16.7 million in 2001. Factoring out accounting changes, income was up 4.3% from $524 million in 2001. Revenue increased 2.3% to $5.85 billion, thanks to increased revenue in cable and broadcast TV units, while radio and entertainment units' revenues were flat.
"In the context of what's been happening in our industry, Viacom is the model of stability and opportunity," said Sumner Redstone, chairman-CEO. He reaffirmed guidance of double-digit growth in revenue and earnings per share in 2002.
Total advertising revenue was up 3%, the first positive in four quarters, said Richard Bressler, chief financial officer. Mel Karmazin, president-chief operating officer, noted July and August point to an upturn in advertising even before September, when year-over-year comparisons will become very favorable. "There is today strong advertising momentum," he said.
Clear Channel Communications, meanwhile, moved up its analyst call after the announcement that Randy Michaels would step down as CEO of its radio division to head the New Technologies division. The decision to shift Mr. Michaels was not due to any performance issues at the radio unit, said President-Chief Operating Officer Mark Mays. Net income was $238 million vs. a $110.5 million loss in 2001 on flat revenue of $2.17 billion. Mr. Mays said the company's optimism comes from the wide range of advertisers using radio, "all showing a broad-breadth recovery."
contributing: cara b. dipasquale and jon fine
Reporting this week:
July 29: Kellogg
July 30: Havas
July 31: Primedia, Reader's Digest
Aug. 1: Disney, Meredith