Time Warner said yesterday that profits last year grew by 27% to $3.36bn (£1.78bn), signalling that the world's largest media company is back on track after a turbulent few years.
Chairman and chief executive Richard Parsons, hired to steady the business after the disastrous merger with America Online, said the company had worked over the past 12 months to move beyond its recent troubles. "We are now ... operating a fully settled down Time Warner," he said.
Sales in the full year rose 6.4% to $42.1bn.
Time Warner also said it still holds 5m shares in the internet search engine Google, a stake worth $1bn at yesterday's prices. Time Warner was one of the earliest investors in the business and in the third quarter registered a pre-tax gain of $188m on the sale of shares during Google's initial public offering.
Earnings in the fourth quarter rose 76% as the company benefited from a balance sheet free of its loss-making former music division, as well as higher advertising on its cable networks and increasing revenues from high-speed internet business and video-on-demand.
Profits in the quarter rose to $1.13bn, up from $639m a year earlier. Revenue rose about 2% to $11.1bn. Revenues from advertising were 16% higher at just over $2bn.
The previous year's results had been dragged down by $466m in losses from Warner Music Group, which the company later sold to a group of private investors led by Edgar Bronfman Jr, the former Seagram boss.
The struggling AOL internet service managed an 8% rise in profits during the quarter, to $326m, as advertising revenues improved. But AOL continued to lose subscribers. Since the same quarter last year, it has lost 2m subscribers in the United States and 49,000 in Europe.
The company said it would restate its financial results from 2000 to 2003 to adjust its accounting for a controversial advertising deal between AOL and Bertelsmann, another step toward closing the chapter on a difficult period.
Federal authorities are in the final stages of concluding a two-year inquiry into AOL's accounting. The company has already agreed to pay $510m to settle the civil and criminal inquiries.
Time Warner said earlier this week that it would press AOL dial-up subscribers to upgrade to its cable high-speed internet service. The company is expected to offer AOL to Time Warner Cable customers for free.
The main blight on earnings was Time Warner's film division. Big-budget flops, including Alexander and Catwoman, dragged profits down 27% to $284m. In the previous year, the company enjoyed the success of the final Lord of the Rings instalment.
The publishing division, including IPC in Britain, Time Magazine and Sports Illustrated posted an 8% increase in profits to $29m on flat revenues of $1.6bn.
Mr Parsons has cut Time Warner's debt and doubled its cash position. According to reports, the company last week made a joint bid with cable company Comcast to split the assets of the bankrupt cable network Adelphia Communications.
