Time Warner’s Earnings Soar

NEW YORK — Time Warner Inc. reported higher first-quarter profit Wednesday, driven by strong results in cable TV and a gain from selling its book group, but investors were disappointed by another slump at AOL.

Profit at the New York-based media conglomerate jumped 59% to $1.46 billion, or 32 cents a share, from $915 million, or 19 cents a year ago. Revenue rose 1% to $10.46 billion.

Time Warner’s properties include Warner Bros., Time Inc., CNN and HBO.

Excluding the $206-million gain from the sale of the book group to Lagardere of France and other one-time effects, earnings rose 32% to $1.2 billion from $908 million, or to 26 cents a share. That was well ahead of the 20 cents expected by analysts polled by Thomson Financial, as the company bought back nearly $4 billion of its own shares during the quarter.

Worse-than-expected losses of dial-up subscribers at its AOL unit, however, and a 17% slide in profit there unsettled investors, who sent the company’s shares down 20 cents to $17.22.

JPMorgan analyst John Blackledge described Time Warner’s results as “mixed” in a note to investors, saying the AOL subscriber loss of 835,000 was worse than expected because of the continued decline in dial-up users.

Merrill Lynch analyst Jessica Reif Cohen said in a note that the profit slide at AOL was “even more dramatic than we had anticipated” as the company promoted its high-speed Internet offerings.

Time Warner has been revamping its AOL business from a subscription model to one based on Internet advertising, an approach used with great success by Google Inc. and Yahoo Inc.

Yet while AOL’s advertising revenue grew 26% to $392 million in the quarter, that wasn’t enough to offset the 13% decline in subscription revenue to $1.54 billion. As a result, overall revenue at AOL fell 7%.

Time Inc., a major publisher of consumer magazines including Time, People and Sports Illustrated, also turned in a lackluster quarter with profit down 12% on essentially flat revenue. The company noted declines at its overseas editions and restructuring charges of $12 million as the unit revamped its corporate hierarchy.

“Overall, the consumer magazine business struggled,” Time Warner Chief Executive Richard Parsons said on a conference call with analysts and investors.

Time Warner Cable added 82,000 basic cable subscribers in the quarter.