"The worldwide premieres of Harry Potter And The Sorcerer's Stone next month and The Lord Of The Rings in December will lead our strongest-ever quarter for filmed entertainment," forecast AOL Time Warner chief Gerald Levin.
He made the prediction today (17 Oct) as he presented third quarter results for the world's largest media enterprise, which showed strong film performances making up for slumping advertising.
Earnings before interest, tax, depreciation and amortisation were $2.5bn, while earnings per share diluted by merger costs and exceptional costs, were $0.23. That compares with $0.21 in the third quarter of last year. Net losses increased to $996m, including non-cash charges of $196m for the write-down of investments. That is up from $734m in the previous quarter and $902m last year.
Levin said that the group has the diversity to withstand the economic buffeting. Total revenues rose 6% to $9.3bn, up from $8.8bn on a pro forma basis in last year's corresponding quarter, led by a 13% increase in subscription revenues to $4.2bn. Content and other revenues improved 6% to $3.2bn. Advertising and commerce revenues declined 5% to $1.9bn.
With a top performance from New Line's Rush Hour 2, which has earned $290m worldwide to date, the filmed entertainment division earned revenues of $2.11bn compared with a pro forma $2.08bn in the third quarter and $6.22bn compared with a pro forma $5.71bn for the first nine months. That gave EBITDA of $307m and $670m respectively, compared with pro forma figures of $215m and $613m.
International revenues benefited from releases of A.I. Artificial Intelligence ($217m), Cats & Dogs ($174m) and Swordfish ($123m). And Warner Home Video increased its DVD sales by 96% over last year's third quarter to approximately 24.6 million units.
In early trading today AOL Time Warner shares were unchanged at $33.50.
* Meanwhile, the UK's Pearson has issued a profits warning, predicting that a "dramatic drop" in advertising after Sept 11 could push full-year profits at the Financial Times 40% below last year's $305m (£211m).
Marjorie Scardino, chief executive of Pearson, which owns the Financial Times, a 21% stake in pan-European broadcaster RTL and a raft of educational publishers said: "We are now expecting profits to be significantly below our original plans for the year, almost entirely because of the weakness in advertising markets and, to a lesser extent, the technology recession."