• by Wayne Friedman , February 1, 2007

Time Warner fourth-quarter 2006 profits climbed a healthy 34%, due in part to its cable systems and cable networks. Not a bad return, considering the still struggling AOL division.

Net income rose $1.75 billion in the fourth quarter from $1.3 billion in fourth quarter 2005.

For the period, ad revenue jumped 12% at Turner Networks, while overall revenue--advertisers and subscription fees--moved up 10.3% to $2.68 billion at all its cable nets. Revenue at HBO grew 76% because of a deal that sold "The Sopranos" to the A&E Network. At Time Warner Cable, revenue soared 57% to $3.65 billion.

Such gains helped offset declines at the Warner Bros. movie studio and AOL, the Internet service still undergoing a major overhaul.

AOL witnessed ad sales growth of 49%, continuing the pace of the 46% increase it made in the third quarter. Still, AOL's overall revenue fell 8% to $1.86 billion in the period, dragged by restructuring charges and the loss of revenue from dial-up Internet subscribers. The division's operating income fell 10%.

At Warner Bros., the film unit had a difficult time, compared with the previous year, when it had "Harry Potter and the Goblet of Fire" and DVD sales of "Batman Begins." Time Warner's filmed entertainment revenue fell nearly 15% to $3.09 billion.

For the future, Time Warner feels that offering consumers digital cable, broadband and telephone service--a bundle known as the "triple play"--will give the company less churn. Consumers will be less likely to cancel their subscriptions than those that buy only one service.

Concerning its publishing operations, Time Warner's publishing revenue was about flat, at $1.5 billion. Last week, Time Inc. agreed to sell 18 non-core magazines to Bonnier Magazine Group, including such titles as Saveur, Popular Science, Field & Stream, and Skiing. Earlier this month, Time Inc. laid off nearly 300 employees, or about 2.5% of its staff.

Investors weren't fazed. Yesterday, Time Warner's stock was at $21.88--down 0.16 or 0.7%.