Flush TW itching to reel in deals?

Revs hit $10.1 bil as debt falls

NEW YORK — Time Warner’s profit soared in the first quarter as revenue jumped 9% on star turns by filmed entertainment and TV networks.

Net income more than doubled to$961 million from $396 million. Revenue stood at $10.1 billion. Debt fell to $18.8 billion from $22.7 billion. Conglom has deleveraged by unloading assets, as in its $2.7 billion sale of Warner Music last month.

The stock, which closed Wednesday at $16.51, rose 3.2% to $17.04 in after-hours trading on the upbeat stats and full-year outlook.

During a conference call, chairman-CEO Richard Parsons was cagey on potential acquisitions amid reports the conglom is eyeing both Adelphia Communications and MGM.

Shaping up

“We’ve said that we like the businesses we’re in. We would like to grow our cable footprint and other businesses. But we don’t have anything we can talk about,” he said. “We’ve gotten ourselves into shape now. We can open our eyes a little wider.”

In its earnings report, Time Warner noted the Securities & Exchange Commission likely would refuse to “declare effective” any registration statement from the conglom or its subsids until the commission concludes an ongoing investigation into the company’s accounting. That means for now Time Warner may be able to consider only all-cash deals.

Wall Street is also antsy about the future of unit America Online, which Parsons and Don Logan, head of TW’s media and communications group, defended.

“All of us on the board were impressed by AOL’s momentum” at a recent presentation by AOL chief Jon Miller, Parsons said. “I’m not going to lay out for you where and how it fits in. What I will say is what I’ve said before — that we have a lot of confidence that this is a business that is regaining its stride, that we believe it is undervalued and that reflects itself in our stock.”

Execs had only praise for filmed entertainment, where revs rose 25% to $2.9 billion. Numbers were buoyed by higher license fees from third-cycle syndication sales of “Seinfeld” and higher homevideo revenue from titles including New Line’s “The Texas Chainsaw Massacre” and “Friends: The Complete Sixth Season” from Warner Bros.

Shadow of ‘King’

New Line had a record quarter. “The Lord of the Rings: The Return of the King” is now the second-highest-grossing pic ever. After a heady 2003, cautioned Jeff Bewkes, head of entertainment and networks, New Line’s numbers will trend lower.

Warner Bros. theatrical revenue dipped on tough comparisons with “Harry Potter and the Chamber of Secrets” a year ago. But Bewkes sees an uptick with pics like the upcoming Brad Pitt starrer “Troy” and “Harry Potter and the Prisoner of Azkaban.”

Networks, which include the Turner nets and the WB, saw operating income rise 51% to $683 million on a 5% increase in revenue to $2.2 billion.

“Networks and studio results were nothing short of spectacular,” said Bewkes, who oversees both divisions. He cited double-digit increases in subscription and advertising at Turner and lower programming costs — that will rise as the year progresses.

Bewkes said costs at CNN will be backended this year as coverage of the presidential race heats up.

Channeling ads, subs

TNT and TBS — latter to be rebranded as a comedy net in June to appeal to younger auds — are the top-rated ad-supported cable nets and HBO the top pay net.

Total ad revenue rose 12%, with 14% growth at the Turner nets and a 6% increase at the WB. Content revenue fell 20% on tough comparisons at HBO vs. last year’s video release of “My Big Fat Greek Wedding.”

Turner took a $7 million loss on the sale of the Atlanta Hawks and Thrashers.

Time Warner Cable saw revenue rise 11% to $2 billion. Operating income grew 8% to $386 million. Ad revenue rose 7%.

A 12% increase in sub revenue was driven by high-speed data (up 32%) and other advanced digital services. Unit is rapidly adding digital video and video-on-demand subs. Basic cable subscriptions were flat. Cable company is on track to deploy its new digital phone service to all of its subs by the year’s end.

At AOL, revenue was about flat at $2.2 billion. Operating income jumped 43% to $277 million. Ad revenue was down 5%. Subscription revenue was up 1% due mostly to favorable foreign currency exchange rates at AOL Europe.

New takers for AOL Broadband were offset by declines in U.S. narrow-band subs. Overall, AOL lost 237,000 subs from the year-earlier quarter for a total of 24 million in the U.S. AOL Europe added 38,000 for 6.4 million.

Publishing revs fell 5% to $1.08 billion due to the sale of the Time Life direct marketing operation and continued softness in print advertising. Operating income rose 26% to $102 million.

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