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Time Warner Releases Record 2nd Quarter Results

Time Warner Inc. has reported record operating results for the second quarter of 2000. Operating income before amortization of intangible assets (EBITA) grew 12% over the comparable 1999 quarter. With cable networks, publishing, filmed entertainment, and cable all posting record normalized operating results, Time Warner reported normalized EBITA of US$1.381 billion for 2000's second quarter versus $1.237 billion for the same period a year ago. On an actual basis, Time Warner reported EBITA of $1.295 billion on revenues of $7.080 billion for 2000's second quarter, compared to EBITA of $2.014 billion on revenues of $6.531 billion for the same period a year ago. For the second quarter, basic net income per common share, when normalized to exclude the aggregate effect of significant nonrecurring items was $.11 in both 2000 and 1999. On a reported basis, Time Warner had second-quarter net income of $.05 per common share in 2000, compared to net income of $.46 per common share during the same period in 1999. Time Warner's chairman and CEO Gerald M. Levin said, "I am pleased with our record operating results and strong EBITA growth rate of 12% for the first half of 2000, which puts us on track for another record-breaking year. During the quarter, shareholders of both Time Warner and AOL overwhelmingly approved our proposed merger, a significant step forward in the merger process, which will create the first Internet-powered media and communications company. In May, we announced the management team and organization for AOL Time Warner, which will make the best use of talent across the combined company, speed the integration of our businesses, and enable us to capitalize quickly on the enormous opportunities presented by the Internet's next wave of growth. We are already working very well together in developing key business strategies for our combined company. We remain confident that the regulatory agencies will give their approval and enable us to close the merger in the fall as planned." The cable networks division saw a record EBITA of $422 million, up 15%, versus $366 million a year previous. For the first half of the year, the EBITA was a record $786 million, up 16%, versus $675 million a year prior. The Turner Cable Networks' 16% EBITA climb during the quarter resulted from strong gains in both subscription and advertising revenues, partially offset by lower results at World Championship Wrestling. HBO's 15% EBITA growth during the quarter reflects an increase in subscription revenues for HBO and Cinemax. In addition, Cartoon Network posted the best prime time kids 2-11 rating and demographic delivery in its eight-year history. The results for the filmed entertainment arm were an operating record $199 million on a normalized basis, up 3%, compared to $193 million a year ago. Six-month EBITA was an operating record of $374 million on a normalized basis, up 9%, versus $343 million a year ago. Warner Bros. saw a 19% normalized EBITA growth, while New Line saw lower results, due to the lack of a mega-hit like last years AUSTIN POWERS: THE SPY WHO SHAGGED ME. Warner Bros. record EBITA was due to higher results from theatrical operations, which included the success of THE PERFECT STORM. The division also saw an increase of over 135% in DVD sales. The second quarter saw Time Warner Cable post a record operating EBITA of $462 million on a normalized basis, up 13%, versus $410 million a year ago. For the first six months of 2000, the EBITA was an operating record $919 million on a normalized basis, up 13%, versus $816 million a year ago. The cable division's growth reflects significant increases in revenues from basic cable, deployment of digital and high-speed Internet services, pay-per-view and advertising. Yet, the WB Television Network posted a loss of $21 million in the quarter, an improvement of $9 million over the loss of $30 million in the second quarter of 1999. Year-to-date EBITA is a loss of $52 million, compared to a loss of $71 million for the 1999 period. Yet on a season-to-date basis, the Kids' WB! weekend line-up continues to rank #1 in ratings over all of its broadcast network competition. In addition, Time Warner Digital Media had a loss of $55 million for the quarter and $85 million for the six-month period, reflecting start-up activities associated with the company's digital media businesses.

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