Time Warner’s first quarter results were yet another demonstration of how the one-time biggest media company on Earth is making some progress, but continues to grapple with its biggest issue — AOL.

First the good news (take-aways from the call):

• Cable networks were a standout in the first quarter, with advertising revenue rising 13 percent. The strong audience ratings have inspired it to hold its presentation to advertisers on the same week as the broadcast upfronts. Bewkes: “You may have noticed that this year, Turner’s up front is scheduled for the same week as the broadcast upfront. That is not a coincidence. We believe Turner is now positioned better than ever to challenge the broadcast networks. This argument is increasingly resonating with advertisers and agencies and we expect to see that reflected in this upfront.” Just how good is it? Consider that CPMs at Turner are about 60 to 70 percent of the prices commanded by broadcast, Bewkes said.
• In a quarter when Wall Street expected rivals to steal share from cable operators, Time Warner Cable stunned investors by adding 55,000 basic video subscribers. Growth in new customers came across the board.
• Another bright sign this year could come from a decision to shrink film release windows. Time Warner plans to release all of its films on video-on-demand and DVDs on the same day. A decision to back Sony’s Blu-ray has encouraged Time Warner to now project industry wide sales of movies on next generation format to rise about 30 percent faster than it previously thought, or about $ 1 billion in sales.
• Time Inc, a perennially unloved division, has rarely been a source of good news for the company. But in the first quarter, its digital initiatives helped the division’s online revenue offset the decline in print advertising. Unique visitors were up about 30 percent year over year and page views rose 25 percent.

Now the bad…

• AOL: Even as the rivals enjoy robust online advertising growth, AOL’s restructuring and “execution challenges” in trying to integrate over $1 billion worth of acquisitions hurt the first and probably the second quarter’s display advertising business. What’s also troubling to investors is that its third party advertising business, which commands lower margins, will be a bigger part of its business mix, executives said. Online ad growth will be better in the second quarter compared to the first, but 2008 profits is expected to be lower than last year.
• There was a small measure of relief that Time Warner has finally decided to split off its cable business, but investors were looking for much more — like news of a big special dividend paid out by Time Warner Cable to Time Warner shareholders for its troubles all these years — or any details at all.
• Why didn’t a single analyst ask a question about AOL’s context within the Microsoft, Yahoo bid? And none of the executives volunteered information either.

(Photo: Reuters)