Cable business lifts Time Warner earnings

Strength in cable TV helped Time Warner increase second-quarter earnings 5%, beating analyst forecasts, though the results were clouded by a new set of issues in the AOL Internet unit, an Associated Press report said.

According to the Associated Press report, the New York-based media conglomerate, which owns CNN, HBO and the Time publications, said that from April to June it earned $1.07 billion, ahead of last year's profit of $1.01 billion. Revenue rose 6% to just under $11 billion.

The revenue forecast had been $11.1 billion, slightly higher than what was achieved.

Although Time Warner also announced a new $5 billion stock buyback plan, shares fell 3.2%, to $18.64, the Associated Press report said.

The report said one cause for investor concern was AOL, where revenue dropped 38% to $1.3 billion. That decline was not surprising, since AOL has been shifting from its subscription model centered around selling Internet access to an advertising-focused approach in which many AOL services are now free.

In fact, AOL's operating income rose 9% to $360 million.

But AOL's ad revenue rose just 16%, well below the growth of more than 40% seen in each of the past four quarters.

Time Warner no longer expects AOL to grow its advertising sales at or above the rate seen by the broader US Internet industry this year, the report further said.