Time Warner Inc.'s cable operations contributed to record
operating income for the company in the second quarter and first half of the year, fueled
by efficiencies gained from system swaps with various MSOs.
Companywide, before extraordinary items, net income was 12
cents per share in the quarter, compared with a loss of 1 cent per share a year ago. For
the six-month period, net income was also 12 cents per share, compared with a loss of 13
cents last year.
The results beat analysts' earnings estimates of 6 cents
per share for the period.
Time Warner Entertainment's cable unit, which includes most
of the parent company's cable operations, nearly tripled its cash flow -- or earnings
before interest, taxes and amortization (EBITA) -- in the second quarter to $1.18 billion,
up from $448 million a year ago. EBITA for the six months was $1.583 billion, up from $829
million in 1998.
Time Warner said the results reflected net pretax gains of
$771 million in the second quarter and $70 million in 1998 relating to the sale or
exchange of cable systems and investments. For the six-month period, net pretax gains were
$771 million in 1999 and $84 million in 1998.
After normalizing for the effects of these gains, Time
Warner Cable's internal EBITA growth was 11 percent for the second quarter and 10 percent
for the first half of the year.
The company's Turner Broadcasting System Inc. cable
networks reported record EBITA of $235 million, an increase of 19 percent over the same
period last year. EBITA for the six-month period was also up 19 percent, to $419 million,
compared with $351 million a year earlier.
The company's Home Box Office unit posted record cash flow
of $131 million, up 16 percent from the year-ago period. For the first six months of the
year, EBITA at HBO was up 15 percent to $256 million.
Time Warner said the increases were due to higher
subscription revenue for HBO and Cinemax and improvements at Comedy Central. Also during
the quarter, HBO launched two new multiplex channels -- HBO Comedy and HBO Zone -- as part
of its multiplex package called "HBO The Works."
At the end of the second quarter, Time Warner Cable had
about 12.9 million subscribers and it passed 21.1 million homes -- more than 20 percent of
U.S. television households.
"Fueled by strong results from all of our businesses
in the second quarter, our performance during the first half of 1999 keeps us on track for
another record year," Time Warner chairman Gerald Levin said in a prepared statement.
"Critically important to our company's growth is the
progress that we are making with our digital strategy," he added. "Going
forward, the mix of our businesses makes us extremely well positioned to take advantage of
the changes that digital technology is bringing to the media marketplace."