Time Warner to plunge to its first loss in six years

Time Warner, the media giant whose businesses include Time magazine, CNN, AOL, HBO and the Warner Bros film studio, will plunge to its first annual loss in six years, it warned yesterday.

A string of misfortunes brought about by the credit crisis and the gathering recession will lead to a $25bn (£16.5bn) charge against its 2008 results, the company said. The main culprit is a plunge in advertising revenues across its publishing, television and online arms, which has reduced the value of these businesses.

But it will also take a hit of $281m from a court ruling that it breached an oral agreement to sell two sports teams, and of $60m from the bankruptcy of the investment bank Lehman Brothers, which was a tenant in its Time & Life building in Manhattan's Rockefeller Centre. There is also going to be a loss at its majority-owned cable TV subsidiary, Time Warner Cable, which accounts for $15bn of the $25bn charges.

Less than two months after saying it was heading for a profit of at least $3.7bn from continuing operations, it admitted yesterday that "the economic environment has proved somewhat more challenging than the company previously expected". It said it now expected to post a loss for the year but did not say exactly how much.

Time Warner shares slipped 6.3 per cent in New York. They are down by around 40 per cent since the start of the US recession a little over a year ago.

The company last reported a loss in 2002, when it had to write down the value of AOL, the internet service provider it had bought at the peak of the dotcom bubble. That $98.7bn loss was, at the time, the largest in US corporate history. AOL is again proving a headache, as it switched last year from being a subscription service to a business model reliant instead on advertising.

Meanwhile, the collapse of Woolworths in the UK and the electronics retailer Circuit City in the US has hit advertising revenues across Time Warner's businesses. It will set aside $40m to cover money that it is owed by these and other bankrupt customers.

At the Time Warner Cable subsidiary – which is being spun off, but currently remains 85 per cent-owned by Time Warner – subscriber growth is slowing and customers are increasingly shunning premium channels in favour of more basic television services. The company has also had to write down the value of its stake in Clearwire, a company building a wireless internet and phone network in the US, by $350m.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

MBDA UK Ltd: Indirect Procurement Category Manager

Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

Recruitment Genius: Web Developer - PHP

£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...

Day In a Page

Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness
Homeless Veterans appeal: Homeless in Wales can find inspiration from Daniel’s story

Homeless Veterans appeal

Homeless in Wales can find inspiration from Daniel’s story
Front National family feud? Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks

Front National family feud?

Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks
Pot of gold: tasting the world’s most expensive tea

Pot of gold

Tasting the world’s most expensive tea
10 best wildlife-watching experiences: From hen harriers to porpoises

From hen harriers to porpoises: 10 best wildlife-watching experiences

While many of Britain's birds have flown south for the winter, it's still a great time to get outside for a spot of twitching
Nick Easter: 'I don’t want just to hold tackle bags, I want to be out there'

'I don’t want just to hold tackle bags, I want to be out there'

Nick Easter targeting World Cup place after England recall
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore