Time Warner (TWX) performed fairly over 2006 with revenue increasing by 4 percent to $44.2 billion. Operating income grew by 11 percent to $11.1 billion before depreciation and amortization.
Considering the revenue shortfalls in their publishing division Time Inc., AOL and their film unit, the company has to be happy to have increased revenue at all.
Time Inc. had revenue declines of $29 million for the year, dropping 1 percent to $5.2 billion. A 7 percent loss of revenue from businesses not connected to the magazines, offset the 2 percent gain in ad revenue.
The online ad revenue growth was also nullified by the decline in print-magazine revenue, which dropped by 3 percent to $1.1 billion.
With the AOL division, revenue fell overall by 5 percent to $7.9 billion. This wasn't unexpected as they are transforming from a subscription model to an ad-supported model. Subscriptions dropped by 14 percent for the year while advertising revenue grew by 41 percent. A good sign. AOL's change may happen quicker than originally anticipated.
CEO Dick Parsons said, "During the year we repositioned AOL as a primarily advertising-driven business and this strategic shift has already yielded strong financial results. For the last nine months of the year, we believe our ad growth was faster than the industry average, which of course means that AOL was taking share for the first time in many years. Our new management team is totally focused on laying the groundwork for continuing this success."
The film division struggled last year, after its record-breaking year in 2005. Overall revenue dropped by 11 percent at Warner Bros. Entertainment and New Line Cinema.
Time Warner's cable unit did pretty good, but most of it was connected to acquisitions. As a result, revenue surged by 34 percent to $11.8 billion.
The networks did well for the company as well, with revenue increasing by 7 percent to $10.3 billion. A lot of that was connected to increases in advertising, content and subscriptions. With content, the major increase was based upon the syndication of "The Sopranos," which helped growth to reach 7 percent for 2006.
While this helps the company look fair for the year, a lot of growth was connected to one-off deals or acquisitions. The company and its future is really connected to its successful implementation and execution of its digital strategy. These other measures are being used to prop its growth and share price during the transitional period
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