Operating Income at AOL before depreciation and amortisation improved to $8.5 billion from a loss of $35.8 billion in the prior year. The fourth-quarter net profit of Time Warner was $638 million. A year earlier it lost $44.91 billion when it recorded a huge writedown of its America Online unit. Time Warner's Chairman and CEO Dick Parsons was quoted in a company release saying, "Our fourth quarter results were in line with our expectations, and we achieved all of our full-year financial objectives. We generated industry-leading levels of Free Cash Flow, demonstrating the health and vitality of our businesses.

"We also sharpened our focus on how we allocate capital across the company. In keeping with our strategy of deploying capital to only high-growth, high-return investments, we decided to sell our music business at an attractive price. We used the proceeds from all of our asset sales and our free cash flow to dramatically strengthen our balance sheet.

Once our sale of the Warner Music Group closes, we will have completed our net debt reduction programme essentially a year ahead of schedule. Our company exited 2003 substantially stronger than when the year began, and we enter 2004 with a real sense of enthusiasm. Our businesses are well positioned to extend their competitive leadership this year."

As far as the cable business was concerned Time Warner's basic cable subscribers increased at an annual rate of 0.1 per cent. Time Warner Cable added 602,000 net digital video subscribers during 2003. For the full year revenue from the television networks went up by 10 per cent. For the fourth quarter revenues from movies went up by 17 per cent.

For the full year, operating Income increased 22 per cent. This revenue growth was driven by the continued worldwide growth in DVD revenues, increases in television licensing revenues and worldwide theatrical success, led by Warner Bros. Pictures' The Matrix Reloaded and The Matrix Revolutions as well as New Line Cinema's The Lord of the Rings: The Return of the King.