• by Wayne Friedman , February 2, 2006

Time Warner's profits continued to treat the stock market and investors with good news, as its net profits climbed over 21 percent in the fourth quarter of 2005, thanks to business from its cable operations, movie studios, and cable network businesses.

The media conglomerate's media properties--especially HBO, CNN, Warner Bros., and its Time Warner Cable groups--helped the company to a net profit of $1.37 billion in the last three months of 2005, up from $1.13 billion in the same period a year ago. Time Warner's stock closed up 4 percent to $18.22.

Time Warner's results beat earnings estimates--and may, for the time being, help to quell some loud protests from Carl Icahn and his group of disgruntled Time Warner shareholders who want the company to take more drastic action in selling off bits of the company or buying back company shares.

Although the company's management disagrees with Icahn, Time Warner has made some major moves, announcing its intention to repurchase $3 billion of its own stock to date under a $12.5 billion share buyback program that its board authorized last year. It has also proposed a partial spinoff of the cable TV unit.

Just last week, Time Warner also announced plans to merge its money-losing WB network with rival UPN, owned by CBS Corp. Since its inception, the WB network is said to have lost close to $1 billion. Previously, Time Warner sold off a 5 percent piece of AOL to Google for $1 billion.

Time Warner CEO Dick Parsons made his strongest rebuff of Icahn in a conference call yesterday with investors, saying the company "will not experiment with flavor-of-the-day" strategies of boosting shareholder value. This alludes to Viacom Inc.'s recent move to split its company into two pieces in an effort to boost shareholder value.

Parsons added: "No one can run these businesses better than the current management is running them."

On a business-by-business basis, its biggest gains came from its movie studio business, with a major jump of 42 percent during the period and a gain of 11 percent on revenues.

Time Warner Cable, Time Warner's division of its local cable systems, picked up 11 percent in profits on a 13 percent increase in revenue. More business came from subscriber deals for high-speed Internet and digital video services, as well as adding 34,000 basic video subscribers. Time Warner's cable business is second to Comcast Corp., with 11 million subscribers.

On the heels of major layoffs at its magazine division, Time Warner's publishing profits rose 11 percent on a 5 percent rise in revenues. This came after restructuring charges of $28 million. AOL moved up 5 percent in profits, but dropped 8 percent in revenue for the fourth quarter.