* Sees Q4 loss due to $25 bln in goodwill writedowns
* Q4 charge led by lower cable asset valuations
* Cites weaker-than-expected ad sales at AOL, publishing
* Shares fall more than 6 percent
(Adds analyst comments, details on cable valuations)
By Yinka Adegoke
NEW YORK, Jan 7 (Reuters) - Time Warner Inc expects
a fourth quarter loss due to a $25 billion charge, largely
related to the depressed value of its cable assets, and said
advertising at its AOL and publishing units were weaker than
expected.
Shares in the media conglomerate fell more than 6 percent
on Wednesday as investors feared the fourth-quarter results
could indicate a tougher media market in the coming year.
"The operating performance of the business seems a little
weaker than expected in the fourth quarter and could indicate
weakness in 2009," said Chris Marangi, an analyst at Gamco
Investors, which holds Time Warner Inc and Time Warner Cable
stock.
Time Warner expects to post a net loss in 2008, compared to
its previous forecast of earnings per share in the range of
$1.04 to $1.07. Analysts polled by Reuters Estimates had
forecast net profit of $1.07 before one-time items.
In the fourth quarter, about $15 billion of the charges are
for its Time Warner Cable unit, which Time Warner
expects to split off by the end of the current quarter. Both
companies are due to report results on Feb. 4.
Time Warner Inc is also taking charges related to its Time
Inc and AOL units.
Time Warner, which also owns CNN cable network and Warner
Bros movie studios, lowered its fourth quarter outlook for
adjusted operating income before depreciation and amortization
(OIBDA) due to one-time charges and the weaker-than-expected
advertising market.
It expects OIBDA, a measure of cash flow the company
prefers, will rise about 1 percent for the full year from $12.9
billion in 2007. That is down from a previous forecast for 5
percent growth.
CHALLENGING MARKET
Time Warner said the economic environment had proved
"somewhat more challenging" than it had expected, particularly
for its ad businesses at the AOL online and publishing units.
In addition to the goodwill writedowns, Time Warner Inc
said it will record charges of up to $380 million in the fourth
quarter.
They include a $280 million judgment against its Turner
Broadcasting unit in December, up to $60 million from the
restructuring of a lease held by Lehman Brothers until it went
bankrupt.
It will also book a $40 million increase in reserves for
potential credit losses from bankrupt customers including
Circuit City and U.K. retailer Woolworths
The charges lowered its original 2008 OIBDA forecast by
around 3 percentage points. Weaker-than-expected ad sales at
AOL and publishing accounted for another 1 percentage point
drop.
The news of the writedowns put cable asset valuations in
the spotlight.
Time Warner Cable shares fell more than 5 percent, Comcast
Corp declined 3.8 percent and Cablevision Systems
slipped nearly 3 percent.
"We note this is non-cash and largely a function of
depressed public market valuations," Credit Suisse said of the
Time Warner Inc writedowns in a client note. "As such we expect
other media companies to take similar write downs."
Comcast is unlikely to take an impairment charge on its
cable franchise rights in 2008, according to a person close to
the company. But it will likely take a charge on its stake in
Clearwire Corp , which is building a high-speed
wireless network.
Time Warner Cable said in a separate statement it also
anticipates a non-cash impairment charge of around $350 million
related to its stake in Clearwire. It expects to incur a net
loss in 2008.
(Editing by Derek Caney)
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