Time Warner's third-quarter profit dropped 7.8% from a year ago to $499m, as the company set aside $500m for possible settlements of accounting probes at its America Online units.
The world's largest media-entertainment company said its profit amounted to 11 cents a share, or 10 cents without one-time gains, compared with a Wall Street forecast of 14 cents a share. Revenue in the quarter rose 4.9% to $9.97 billion.
America Online's accounting practices continue to be investigated by the Securities and Exchange Commission and the Justice Department. They are probing how Time Warner accounted for $400m that Bertelsmann AG paid to America Online for advertising from 2001 to 2003.
AOL has endured seven straight quarters of customer losses, and sources close to the company said job cuts are expected.
The company's AOL Internet unit reported a 1% increase in revenues to $2.1 billion, thanks to a 44% jump in advertising sales that offset a 3% decline in subscription revenue.
The company's video and cable television operations saw a 10% revenue increase to $2.1 billion dollars.
In film, including the Warner Bros and New Line Cinema units, revenues grew 1% to $2.5 billion. Within the firm's television operations, which include Turner Broadcasting, HBO and The WB Network, revenues were up 8% to $2.2 billion.
