 Time Warner hopes to put the legal matters behind it very soon |
The cost of settling a $2.4bn (�1.35bn) shareholder lawsuit has seen the world's biggest media company, Time Warner, post a quarterly loss. In the three months to July the firm lost $321m, compared to a $777m net profit in the same period in 2004.
The company has reached an initial deal with shareholders who accused it of overstating revenue from 1999 to 2002.
But Dick Parsons, CEO of Time Warner, said even after the settlement the balance sheet remained "strong".
However in early trade in New York, shares in Time Warner fell 2.4% to $17.
Important steps
The firm has set aside a kitty to cover the current lawsuit settlement, and other pending legal actions, of $3bn.
By setting the cash aside, Mr Parsons said it marked "important steps towards putting these matters behind us".
The New York-based giant agreed to settle the first shareholder lawsuit after shareholders accused the company of overstating its position by $1.7bn between January 1999 and August 2002.
The settlement to millions of shareholders who invested in the company during this period is the second largest by a publicly traded company, according to the aggrieved shareholders' legal team.
A court has still to approve this initial settlement deal.
Share buyback
During the second quarter Time Warner also saw revenues fall by 1% to $10.74bn from $10.86bn a year ago.
The threat of further shareholder action and Time Warner's second-quarter loss have led to concerns in some parts of Wall Street.
"They need to show us the light at the end of the tunnel," said Christopher Marangi, an analyst at Gabelli, whose sister company is a Time Warner stock holder.
Time Warner said it had initiated a programme to buy back $5bn of its shares over the next two years.
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They need to show us the light at the end of the tunnel
