updated 8/2/2006 7:51:36 AM ET 2006-08-02T11:51:36

Time Warner Inc., the world’s largest media company, reported a profit Wednesday of $1 billion for the second quarter in contrast to a loss of $409 million a year earlier when it recorded a charge for settling securities litigation.

Time Warner’s cable TV business grew thanks to more high-speed Internet and digital phone customers, offsetting weakness at AOL, which separately announced a plan to offer many of its services, including e-mail, for free.

The company, whose properties also include HBO, Warner Bros. and the Time Inc. magazine publisher, earned 24 cents per share in the April-June period versus a loss of 9 cents per share a year ago.

Excluding one-time items, the earnings were equivalent to 20 cents per share in the most recent period, a penny better than analysts polled by Thomson Financial had been expecting. On a similar basis, the year-ago earnings were 16 cents per share.

Revenues edged up 1 percent to $10.7 billion from $10.6 billion.

On an operating basis, income before depreciation and amortization rose 7 percent to $2.7 billion as gains in cable TV, cable networks and filmed entertainment offset weaker results at AOL and magazine publishing.

In the year-ago period, the company took a $3 billion charge for legal reserves related to settling securities litigation in the wake of the sharp tumble in the company’s share price following AOL’s deal in 2000 to buy Time Warner.

Separately, the company also announced changes in its AOL division, saying it would make its software, e-mail and other parts of the service free to high-speed Internet users.

The move is part of AOL’s strategy to refocus on the booming area of online advertising and shift away from dial-up Internet access subscriptions, which are declining. The company said it didn’t expect the changeover to have an impact on its full-year business outlook.

Time Warner also said it had completed more than half of its $20 billion share buyback program announced last year, paying about $11.7 billion since the program started to buy 14 percent of its outstanding shares.

The AOL division posted a 2 percent decline in revenues and a 4 percent fall in profits as it continued to lose dialup subscribers, offset partly by more gains in advertising. The quarter also included $15 million in charges to close one customer service center and scale back another. As of the end of the quarter, AOL’s subscriber rolls fell 976,000 to 17.7 million.

Time Warner’s cable TV business, the second largest in the country after Comcast Corp., recorded a 15 percent gain in revenues and a 16 percent rise in profits on more growth in premium services like high-speed Internet, digital phone and digital video. This week Time Warner Cable closed a deal to acquire, together with Comcast, the cable systems of Adelphia Communications Corp.

Time Warner said the additional cable systems would add several percentage points to its full-year growth rate in operating profits, which is now expected to be in the low double-digit percentage range, off a base of $10 billion last year — a figure that was adjusted to reflect the sale of its book publishing division. That rate also accounts for the consolidation of Court TV and the shutdown of the struggling WB network.

The company’s movie and TV studios — Warner Bros. and New Line Cinema — posted a 10 percent decline in revenues on lower home video sales and other factors. Profits rose 10 percent on lower costs as well as contributions from syndication sales of “Seinfeld” and “Without a Trace.”

Time Inc., a major magazine publisher that puts out Time, Sports Illustrated, People, Money and many other titles, turned in a 2 percent decline in revenues and an 11 percent fall in profits.

Revenues and profits from cable TV networks both rose 9 percent, partly as a result of the consolidation of Court TV, a network it had half-owned with Liberty Media Corp.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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