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The Clock Is Ticking at Time Warner

Investors are fed up with underperforming media megatitans.

The sum of

Time Warner's


many parts hasn't added up to much for investors lately.

The New York conglomerate runs Time Warner Cable and Warner Brothers along with HBO, New Line and a slew of networks and publishing titles. The company is likely to show solid results on the cable and new services sides when it posts second-quarter numbers Wednesday morning. But Time Warner faces some tough comps on the entertainment side, and its revamped Internet division remains a puzzle.

More pressingly, the report will come as investors are starting to throw up their hands in despair that the big media properties, from Time Warner to


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News Corp.

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, will ever shake off their prolonged slump. Despite its premium assets, Time Warner is tracking well below the major indices, down 12% on the year. On Monday the stock rose 6 cents to $17.08.

As is the case with the other major media players, Time Warner's problem starts with growth. The company has spent years cobbling together high-profile assets, but it has been a while since anyone has been impressed by the professed synergies of these mergers.

Indeed, Goldman Sachs said last month that Time Warner's second-quarter results are likely to mark the fourth consecutive period of single-digit revenue growth for CEO Dick Parsons and his charges. As such Goldman lowered its second-quarter earnings target by a penny a share to 18 cents. The firm kept its projections steady for earnings before interest, taxes, depreciation and amortization of $2.6 billion and revenue of around $11 billion. The firm seeks to do business with companies it covers.

A Thomson Financial First Call analyst survey says Wall Street will be looking for earnings of 19 cents a share on just under $11 billion in revenue.

While cable is set to deliver respectable high-single-digit growth, Wall Street wants to see more from the company's phone and broadband offerings.

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The acquisition with


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of bankrupt cable company Adelphia Communications should factor in positively later this year as long as the integration goes smoothly. But Wall Street seems to be growing less patient with the AOL division, which Time Warner remodeled earlier this summer in an effort to capitalize on the strong online ad market and a decline in Internet subscribers.

Goldman media analyst Anthony Noto said in a note last month that "we think it will be some time before the strategy can impact AOL's growth."

Meanwhile, there will be some hiccups elsewhere as well. Time Warner faces tough comparisons between second-quarter 2004 when it had a

Harry Potter

installment and


, two big box-office drivers. This past quarter it was limited to first takes from

Batman Begins

and something called


. Goldman expects that filmed entertainment will see revenue and earnings declines of 4.6% and 40% during the period to $2.95 billion and $250 million, respectively. It also notes relatively weaker DVD sales on its titles.

Looking ahead, however, third-quarter results in this segment should boom, thanks to chart toppers

Wedding Crashers


Charlie and the Chocolate Factory


At other units, cable network TNT had some higher marketing expenses due to promotion of

Into the West


The Closer

. The bloom is off premium channel HBO at the moment, as its current slate of critically acclaimed shows has struggled to find the mass appeal achieved by hits like

Sex and the City

. A great deal at the network is riding on its new series


, coming in late August, and an executive shake-up could be in order if the series doesn't fly. HBO and New Line have also combined resources, adding distribution vehicle Picturehouse, which will produce eight to 10 independently driven films per year.