Time Warner (NYSE: TWX) reported Q408 results this morning that underscored the increasing difficulty ad-driven media companies are facing as the economy appears to have worsened in the past couple months. Because the company issued a pre-announcement of earnings several weeks ago, there weren’t many major surprises today. But Warner Brothers and Time Inc. each reported declines that exceeded consensus expectations, indicating rockiness ahead for studios and print publishing. Some details from the quarter:

AOL:  Revenues down 23 percent, operating income up 6 percent.
Time Inc.: Revenues down 13 percent, operating income down 70 percent
Cable: Revenues up 8 percent, operating income up 6 percent.
Film: Revenues down 11 percent, operating income up 6 percent.
Turner Networks: Revenues up 9 percent, operating income down 20 percent (up 12 percent without one-time charge)

More after the jump...

—While overall revenues at AOL were largely in line with expectations, AOL ad revenue declined 18 percent, well below the low-double-digit declines many analysts were predicting. This is further evidence of online display advertising’s slide during the fourth quarter of 2008; it appears to be experiencing continued erosion into 2009 (see our IAC earnings report). AOL is largely viewed as a bellwether for display advertising so the results suggest that display appears to be eroding as fast as many print-advertising categories.

—Cable results showed continued strength. In particular, triple-play subscribers increased 4 percent over the previous quarter –- a key area to watch as cable companies battle aggressive competitors in the IPTV space. The number of basic subscribers likely decreased more than many were expecting.

—Time Inc.‘s revenue declines of 13 percent were significantly below analyst expectations, which were for high-single-digit decreases.Operating income also decreased more than most analysts were forecasting, driven by a number of one-time charges. And ad revenue declined 20 percent, providing a window onto the struggles magazines face as marketers continue to lose confidence in print advertising. 

—Film revenue declines of 11 percent are slightly below consensus estimates, which were in the high-single-digit range. But recent announcements of coming layoffs at Warner Brothers served as an early warning that the studio environment was experiencing pressure.

—Turner Networks results were strong, as expected, with growth in ratings, ad rates and inventory.

More on 2009 outlook after the call.

Earnings release (pdf) | Slides (pdf) | Webcast

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