Free AOL Strategy Boosts Time Warner's Q3 Numbers

03 November 2006

NEW YORK: Gains at in its cable businesses and early indications of success from the new subscription-free strategy at AOL boosted quarterly earnings at Time Warner. Sufficiently so to inspire chairman/ceo Richard D Parsons to flights of homespun homily.

Underscoring that AOL's new ad-funded offering fitted well with the group's other advertising-supported businesses, Parsons tugged his ear, chawed on his quid, spat, and observed: "As I sometimes say, 'Everywhere it rains, I want to have a bucket'."

Lest this slice of ol' rockin' chair philosophy left his city-slicker listeners bemused, Parson added: "We need to have this [ad-funded model] in our kit bag because this is where money is going."

In the three months to September 30 TW delivered results that might even silence dissident shareholder Carl Icahn, an eager proponent of amputating AOL and other of the media giant's less profitable limbs..

Across the group as a whole, operating earnings before depreciation and amortization increased 16% and revenues leapt year-on-year by 6% to $10.9 billion (€8.53bn; £5.71bn). Net income increased to $2.3bn from $853 million.

In particular, AOL reported operating profits before depreciation and amortization up by 21% to $563m - despite having shed 2.5 million paying subscribers.

This reflects the success of the switch to free service for high-speed internet users, implemented in August. As a result AOL ad revenues rose 46%.

Data sourced from New York Times; additional content by WARC staff