Time Warner Inc's quarterly revenue fell a steeper-than-expected 9 percent due to a slump in advertising spending and DVD sales, but cost cuts helped profit beat Wall Street forecasts.
The company is also on track to spin off its AOL Internet unit by the end of the year. The spin off is part of a revamping of Time Warner back to its traditional media roots consisting of cable networks like HBO, CNN and TNT, the Warner Bros film studio and its Time Inc publishing units.
Time Warner bought back its 5 percent stake in AOL earlier this month for $283 million, effectively valuing the unit for $5.6 billion.
Time Warner's net profit from continuing operations was $519 million, or 43 cents a share in the second quarter, compared with $564 million, or 47 cents a share, a year earlier.
Time Warner's adjusted profit was 45 cents a share, compared with analysts' forecast of 39 cents according to Reuters Estimates.
Second quarter revenue fell 9 percent to $6.81 billion compared with analysts' forecast of $6.94 billion.
This was better than we had expected on the profit margins, said Thomas Eagan, analyst at Collins Stewart. The revenue was a little bit light but they made up for it with higher margin.
AOL's revenues declined 24 percent to $804 million as the soon-to-be independent unit continued to shed dial-up customers and advertising revenue.
Revenue at Time Inc publishing, the largest magazine publisher in the U.S., fell by 22 percent to $915 million due to a 26 percent decline in advertising revenue.
Warner Bros revenues declined by 9 percent to $2.3 billion despite a stronger theatrical slate led by The Hangover was offset by lower DVD sales.
Revenues at Time Warner's cable networks unit rose 5 percent boosted mainly by a growth in subscription revenues offset by a decline in advertising.
(Reporting by Yinka Adegoke; Editing by Derek Caney)