TW sees its losses shrinking

Time Warner reported improved results Thursday, significantly narrowing its net loss for the second quarter.

After paying preferred dividends, TW posted a loss of $ 83 million for the period, compared to $ 147 million a year earlier. But $ 35 million of this quarter’s loss was an extraordinary item related to the retirement of debt.

The loss per common share was 22 cents (13 cents before the extraordinary item), compared to 40 cents last year.

For the first half of 1993, net loss totaled $ 207 million after preferred dividends, compared to $ 297 million in the first six months of 1992. The six-month numbers for both years include charges of about $ 250 million from the 1989 buy of Warner Communications.

Despite the loss, TW reported significantly improved operating results. For the sixth straight quarter, all five of the company’s operating units posted growth in cash flow while four — filmed entertainment, music, HBO and cable — posted record results for both the second quarter and first half.

Companywide cash flow increased 10% in the second quarter to $ 673 million on revenues of $ 3.3 billion, compared to $ 612 million on revenues of $ 3.1 billion in the year-earlier period. For the first half of 1993, cash flow was $ 1.303 billion on revenues of $ 6.5 billion, vs. $ 1.173 billion on revenues of $ 6.1 billion for first-half ’92.

TW topper Gerald Levin said in a release: “This was a strong quarter for results, alliances and strengthening our balance sheet. In the quarter, we announced a significant $ 2.5 billion strategic alliance with U S West, which will accelerate the design, construction and operation of digital access Full Service Networks.

“We have continued our progress in restructuring our balance sheet by redeeming $ 900 million of Time Warner 8 3/4% convertible subordinated debentures with funds raised from lower-cost debt.

“Overall, these actions continue the improvements we started in 1992 to restructure our debt through significant lengthening of maturities, reducing our financing costs and increasing our cash flow.”

The company’s performance was generally in line with analysts’ expectations.

Filmed entertainment

Second-quarter cash flow from the company’s filmed entertainment division reached a record $ 105 million vs. $ 101 million a year ago. For the first half of 1993, cash flow was a record $ 209 million, vs. $ 197 million for the same period in 1992.

Domestic theatrical revenues were led by “Dave” ($ 61 million at the box office to date), “Made in America” ($ 42 million) and “Dennis the Menace” ($ 36 million). Record international theatrical and worldwide syndication revenues also boosted the quarter.

Music

The Warner Music Group posted record second-quarter cash flow of $ 136 million vs. $ 126 million in the same period last year. For the half, cash flow was a record $ 296 million vs. $ 267 million for the ’92 half. Contributing to the quarter’s results were increases in international music sales.

HBO

TW’s programming/HBO division had a record second-quarter cash flow of $ 57 million, compared with $ 53 million a year ago. For first half ’93, cash flow was a record $ 112 million vs. $ 105 million a year ago. TW said the boost was primarily due to improved results from new business activities like sports merchandising and ancillary businesses like HBOle.

Cable

Time Warner Cable’s cash flow rose to a record $ 270 million in the quarter from $ 244 million in ’92. Cash flow for the first half was a record $ 525 million, up from $ 472 million a year ago. TW cited an increasing number of subscribers as well as continued growth in ad and pay-per-view revenues.

Publishing

Second-quarter cash flow for Time Inc. was $ 105 million compared to $ 88 million a year ago. For the first six months, cash flow was $ 161 million vs. $ 132 million for first-half ’92.

The second-quarter growth was driven by strong magazine circulation results, successful product introductions at Time-Life Inc., the improved overall performance at Time Inc.’s regional and lifestyles magazines, and operating margin improvements.

Separately, TW declared a regular quarterly cash dividend of 8 cents per common share payable on Sept. 13, 1993, to shareholders of record Aug. 24.

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