May 3 (Bloomberg) -- Time Warner Inc., the world's largest media company, said first-quarter profit rose 59 percent as its cable systems unit sold more packages of TV, phone and high-speed Internet services.
Net income increased to $1.46 billion, or 32 cents a share, from $915 million, or 19 cents, a year earlier, New York-based Time Warner said today in a statement distributed by Business Wire. Excluding some costs and gains, profit was 20 cents a share, matching an estimate by Merrill Lynch & Co. analyst Jessica Reif Cohen. Sales rose less than 1 percent to $10.5 billion.
A 15 percent increase in revenue at Time Warner Cable, the second-biggest U.S. provider, helped counter a decline at the film unit and the AOL Web division. Time Warner Chief Executive Officer Richard Parsons, after fending off an attempt to break up the company, is boosting online advertising sales at AOL to compensate for the loss of 7 million subscribers in four years.
``The upside is Time Warner Cable,'' said Scott Benesch, an analyst at U.S. Trust Co. in New York, before the earnings report. ``AOL is kind of a coin toss.''
Analysts on average expected a profit of 20 cents a share on sales of $10.9 billion in the quarter, according to 15 estimates in a Thomson Financial survey.
Shares in Time Warner, which also owns Warner Bros. film studios and People magazine, yesterday advanced 8 cents to $17.42 in New York Stock Exchange composite trading. Parsons last year said AOL's recovery is the key to boosting Time Warner's stock price, which is little changed this year.
Asset Sale
During the quarter, Time Warner sold its book unit for $532 million and Turner South, a cable-TV division, for an undisclosed price. Last year, earnings were boosted by 2 cents a share because of a $51 million tax benefit and a $80 million gain on an option related to Warner Music Group Corp., a former unit.
Time Warner Cable was the company's fastest growing unit for the ninth straight quarter. Larger competitor Comcast Corp. last week said quarterly profit more than tripled as new phone customers fueled demand for cable and Internet.
Dulles, Virginia-based AOL, which makes about 80 percent of its revenue from subscriptions to its Web-access service, has revamped its Web site to offer free news, videos and e-mail. The division is trying to tap a surge in online advertising that has propelled earnings growth at companies such as Google Inc.
``The story is driven by a turn in AOL,'' Richard Steinberg, president of Fort Lauderdale, Florida-based Steinberg Global Asset Management, said before the earnings report. Steinberg owned 38,000 shares in Time Warner as of March, according to Bloomberg data. ``So goes AOL, so goes Time Warner.''
Parsons, 58, last month said he has resisted selling AOL because the unit is ``undervalued'' and predicted sales may start rising again as soon as the end of the year.
In February, he agreed to increase the company's share buyback plan to $20 billion, cut costs by $1 billion over two years and add two independent directors to the board, ending a six-month effort by billionaire investor Carl Icahn to seize control of Time Warner and break the company into four parts.
Time Warner's 6.875 percent bonds maturing in 2012 rose 0.06 cent on the dollar to 103.75 cents on the dollar yesterday, according to Trace, the bond-price reporting system of the NASD. The yield fell to 6.12 percent.
