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Buffalo News

By ASSOCIATED PRESS

Time Warner Inc. swung to a $1 billion profit in the second quarter and released details Wednesday of a long-anticipated plan to offer many AOL services such as e-mail for free.

The world's largest media company, which also owns HBO, CNN, Warner Bros. and Time Inc., earned 24 cents a share in the April- June period.

Time Warner lost $409 million or 9 cents per share in the same period a year ago, when the company recorded a $3 billion charge for settling securities litigation.

Excluding one-time items, the media company earned 20 cents per share in the most recent period, a penny better than analysts polled by Thomson Financial expected. On a similar basis, the year-ago earnings were 16 cents per share. Revenues edged up 1 percent to $10.7 billion.

Time Warner Cable recorded a 15 percent gain in revenues. This week it closed a deal to acquire, together with Comcast, the cable systems of Adelphia Communications Corp.

The AOL division posted a 2 percent decline in revenues as it continued to lose dial-up subscribers, offset partly by a 40 percent gain in advertising. However, subscription fees, which still make up 76 percent of AOL's revenues, fell 11 percent in the period.

AOL also lost 976,000 subscribers in the quarter, giving it a base of 17.7 million.

The revamp at AOL is aimed at taking advantage of the boom in online advertising while reducing exposure to the rapidly dwindling dial-up business. Under the plans announced Wednesday, AOL will now offer its software, e-mail and other applications free to any Internet user.

The company expects to save more than $1 billion by the end of 2007 by cutting marketing, network and overhead costs. That's also roughly the amount AOL could lose annually if all 6.2 million of its subscribers with broadband stop paying extra -- generally $15 a month -- for access to AOL's content.

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