Time Warner Taking $25 Billion Charge

Things are worse for Time Warner than it thought back in early November.

On Nov. 5, the media giant forecast its 2008 adjusted operating income to grow about 5 percent over 2007’s haul of $12.9 billion.

But some $370 million to $380 million in previously unseen charges have knocked down that projected income growth.

What’s more, it expects to devalue its assets by some $25 billion in the fourth quarter.

In December, the company suffered a $281 million blow from a judgment against Turner Broadcasting System in favor of David McDavid, former part-owner Dallas Mavericks, in a lawsuit stemming from his failed attempt to buy the Atlanta (NBA) Hawks and Atlanta (NHL) Thrashers from TBS. Time Warner is chalking up the charge despite its belief, it said, that the verdict could be overturned.

Also, a lessee of the Time & Life Building, declared bankruptcy, costing the company $50 million to $60 million.

Then there’s the $40 million the company must hold in reserve due to several Time Warner who have recently declared bankruptcy.

“In addition to these items, the economic environment has proved somewhat more challenging than the company previously expected, particularly for the advertising businesses at the AOL and publishing segments, further reducing the expected growth rate in 2008,” the company said in a statement.

Now Time Warner anticipates 2008 income growth of about 1 percent.

But that doesn’t take into account the non-cash devaluation on assets of $25 billion it expects to take regarding its cable, publishing and AOL segments. With that charge, the company expects an operating loss and net loss in 2008, after its operating income of $8.9 billion in 2007.

The net 2008 loss per diluted share for continuing operations is now forecast at $1.04 to $1.07.

Time Warner will report its actual fourth-quarter and full-year results Feb. 4.