Time Warner sees operating loss for 2008

Expecting impairment charge of around $25 bil

NEW YORK -- Time Warner said Wednesday morning its 2008 adjusted operating income before depreciation and amortization missed expectations amid the continuing economic downturn and special items.

It also said it will report a net and operating loss for the year as it expects to take an impairment charge of around $25 billion to write down the value of its cable, AOL and magazine unit assets.

The entertainment giant had as recently as early November predicted 5% growth in adjusted OIBDA for 2008 off a 2007 base of $12.9 billion.

Now it projects only a 1% gain.

Shaving one percentage point of its adjusted OIBDA expectations is the current recession, according to TW. "The economic environment has proved somewhat more challenging than the company previously expected, particularly for the advertising businesses at the AOL and publishing segments," it said.

TW also expects to record several special items totaling $370 million-$380 million in the fourth quarter of 2008 that will reduce full-year financials.

The items relate to a judgment against Turner Broadcasting System in December regarding the 2004 sale of its winter sports teams (making for a charge of around $280 million); the restructuring of a lease for space in the Time & Life Building, previously held by now-bankrupt Lehman Bros. ($50 million-$60 million); and an increase of approximately $40 million in reserves for potential credit losses related to customers who recently declared bankruptcy. A source said those customers were electronics retailer Circuit City and retail giant Woolworth in the U.K.

Also Tuesday morning, TW said it anticipates to incur a non-cash impairment charge on "certain of its goodwill and identifiable intangible assets" in the fourth quarter. The charge will cover its cable, publishing and AOL segments.

Due to the impairment charge, the company expects an operating loss for 2008, compared to an operating profit of $8.9 billion in 2007.
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