LONDON (Brand Republic) – Shares in US media giant Time Warner tumbled 15% on the news that the company’s full-year earnings would fall short of expectations due to a decline in advertising revenues, a fall in music sales and disappointing box office results for the Adam Sandler film, Little Nicky.
The company said that Ebitda (earnings before interest, taxes and amortisation) would only reach 11% compared with the 12% or 13% that had been forecast.
Time Warner is also set to pay between $20bn and $40bn to increase its stake in broadband ISP Road Runner. This will enable the company to meet US government regulatory requirements concerned with its merger with AOL.
Time Warner is not the only media group to have suffered at the hand of slowing advertising sales. News Corporation and Dow Jones have both warned about a softening in advertising revenues.
Time Warner admitted yesterday to slowing revenues, especially in advertising on its cable networks, which it said “were in line with prevailing market conditions”.
The announcement comes just two months after the company downplayed reports in October that advertising revenues at the company were falling.
However the company’s publishing division -– home to Time, People and Fortune -– is on track to post healthy results. Its cable systems group is also set to meet its targets.
Shares in Time Warner closed down $9.47 yesterday at $63.25, while its merger partner, AOL saw its share price fall $6.72 to $42.24.
This article was first published on brandrepublic.com