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To: Bearded One who wrote (3838)	7/15/1998 5:55:00 PM
From: EPS	Read Replies (2) \| Respond to of 4903

Wednesday July 15, 5:42 pm Eastern Time Time Warner Suggests Future Venture By ERIC R. QUINONES AP Business Writer NEW YORK (AP) -- Time Warner Inc. [NYSE:TWX - news] said Wednesday it hopes to strike deals for long-distance companies to provide local phone service using its cable lines, aiming to strengthen its already booming cable business. Speaking after the release of surprisingly strong second-quarter profits, chairman Gerald Levin said other cable companies will benefit from AT (NYSE:T - news)&T Corp.'s planned purchase of Tele-Communications Inc. (Nasdaq:LBTYA - news; Nasdaq:TCOMA - news) The AT&T deal shows that cable companies could benefit as long-distance providers look for a lower-cost alternative to leasing local phone wires for entry into the $110 billion local telephone market. ''It's a substantial, unbelievable change,'' Levin said of AT&T's entry into the cable business. Time Warner is talking with AT&T and other long-distance providers about how its cable systems could be used for local phone service, including possible leasing arrangements. But Time Warner president Richard Parsons said no specific deals are being actively negotiated. The comments came at a press briefing following the release of Time Warner's second-quarter results, which showed that profits more than tripled on the strength of its cable systems, cable networks, magazines and Warner Bros. studio. The results soundly beat Wall Street expectations and sent Time Warner shares up $1.87 1/2 to a 52-week high of $93.12 1/2 on the New York Stock Exchange. Time Warner shares were trading in the low $40s when it completed the takeover of Turner Broadcasting System Inc. in October 1996. At the briefing, Levin also squashed recent rumors that Time Warner was seeking to invest in a company such as Netscape Communications Corp. [Nasdaq:NSCP - news] or Lycos Inc. (Nasdaq:LCOS - news) that provides services to search the Internet. Big media players have reportedly been seeking such investments to establish their Internet presence after NBC bought a piece of the Snap! directory service and Walt Disney Co. (NYSE:DIS - news) acquired a stake in Infoseek Corp. (Nasdaq:SEEK - news) But Levin said Time Warner will concentrate on developing its own online businesses. The world's largest media and entertainment company earned $101 million, or 4 cents per share on a diluted basis, in the quarter ended June 30. In the same period last year, Time Warner earned $30 million, which equaled a loss of 9 cents per share because of dividend payouts on its preferred stock. Revenue rose 10 percent to $6.52 billion from $5.92 billion. Analysts had expected a loss of 4 cents per share in the latest quarter, according to a survey by First Call Corp. The results include Time Warner Entertainment Co., a partnership with MediaOne Group Inc. (NYSE:UMG - news) that holds most of Time Warner's cable systems, Warner Bros. and HBO. MediaOne, formerly U S West Media Group, owns 25.5 percent of the partnership. Time Warner's cash flow -- a measure of profits excluding interest, taxes and other non-operating items -- jumped 17 percent to $1.16 billion during the quarter. Wall Street views cash flow as a key measure of performance for big entertainment companies. The company's cable systems, which had 11.9 million subscribers at the end of the quarter, recorded higher profits, as did its cable networks, which include CNN, TBS, TNT, Cartoon Network and Cinemax. Publishing profits increased, buoyed by advertising gains at Fortune, In Style and People, and stronger circulation revenue from People, Time and Entertainment Weekly. Warner Bros. profits increased on higher television production and distribution revenue -- the studio produces ''ER'' and ''Friends'' -- and the box-office releases of ''City of Angels'' and ''A Perfect Murder.'' Time Warner also benefited from syndication sales of ''Seinfeld'' through its Castle Rock division and the release of ''Lost in Space'' by New Line Cinema. Warner Music Group continued to suffer, as profits dropped despite higher sales because of poor direct-marketing results. Time Warner's majority-owned WB Network recorded a wider quarterly loss. For the first six months, Time Warner earned $39 million, equal to a loss of 21 cents per share, compared to earnings of $65 million, or a loss of 16 cents per share, last year. Revenue rose to $12.57 billion from $11.56 billion.