Shaila’s Weblog

TW Q4 Loss More Layoff

Posted on: February 6, 2009

A massive dive in media assets writedown to the scale of $24 billions forced Time Warner deeply in the red, landing the company with a $16 billion net loss for its fourth-quarter financial results. At the same time, the company announced a inevitable round of major layoffs.

The writedown of its assets amounted to $24.2 billion. A year ago, the company had a much brighter period, earning a $1.03 billion profit. The stock market, anticipating the news, offered a shrug–down just 1% to $9.70 in midday trading.

Time Warner’s revenue also slipped–down 3%–to $12.31 billion. Media companies have been hit hard recently. The day before, Walt Disney posted lower results, but still reported a profit. It had a 32% decline in quarterly net earnings, as a result of decreased DVD and advertising sales.

While most media companies’ broadcast sales have been lower, that hasn’t been the case for its cable networks.

For example, revenue at Walt Disney’s cable networks Disney Channel and ESPN rose 2% to $2.45 billion. Time Warner also improved 9% in overall revenue to $2.9 billion for Turner Broadcasting and HBO. Ad revenues rose 7% for Turner. In addition, fees paid by cable and satellite operators for Turner and HBO were up 7%.

Still, earnings fell 20% in Time Warner’s network division to $682 billion, mostly due to a $270 million charge from a court judgment.

Continuing problems are hitting Time Warner’s AOL division. Revenue was down 23% to $968 million, subscription revenue fell 27%, and ad sales sank 18%. Time Warner’s publishing division also had a rough time, with a 13% decline in revenue to $1.3 billion, pushed lower by a big 20% drop in ad sales.

Because of the writedown, quarterly results were brought down $4.70 a share. lthough Time Warner Inc. said Wednesday it will lay off 1,250 employees in all its operations in the next few weeks, customers and field office employees here will notice little change in their daily operations, said Gary Underwood, vice president of communications for the company’s North Texas division

“The layoff number is nationwide,” Underwood said.

“This is a small number of jobs company-wide that are affected. It is a minimal change, a very small portion.” With the layoffs, the company believes it will save $90 million a year.

Based in New York, Time Warner is the second largest cable operator in the U.S. with locations in 28 states including California, Ohio, Texas, Nebraska and the Carolinas.

It is the major provider of cable television service in Southeast Texas.

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