In the second quarter of 2006, Time Warner Inc. (NYSE: TWX) had revenue of $10.7 billion, a 1% increase from the same quarter a year ago. Operating income was $1.8 billion. By the five major operating segments, here is what investors will look for in TWX third quarter results.

In Q2, AOL had revenue of $2.046 billion, off 2% from the year before. Operating income for the unit was down 4% to $336 million. As the big Internet operation begins its transition to an advertising base model, watch for revenue to fall further, to under $2 billion, and for operating income to drop below $300 million. With AOL's audience numbers flat, ad revenue will not make up for the ongoing drop in subscription revenue.

Revenue at the company's cable operations rose 15% in Q2 over the same period a year ago hitting $2.721 billion. Operating income was up 22% to $600 million. Excluding any impact from the company's deal to take on Adelphia subscribers, which should not show up until Q4, revenue at TWX cable should rise to nearly $2.9 billion as high-speed data and VoIP sales continue sharp increases. Operating income could hit $700 million.

The company's film entertainment business should continue to struggle. In Q2 revenue was $2.363 billion, a drop of 10% from the same quarter a year ago. Operating income rose 11% to $141 million. There is no reason to think that home video and studio revenue will improve. The box office has continued to be poor for the studio, which now ranks sixth in receipts among major studios in 2006. Look for revenue to fall below $2.25 billion, and operating income to be below $125 million.

In an interview with the Atlanta Journal-Constitution, Time-Warner's CEO, Dick Parsons, said the "whole media sector right now is in a little bit of a malaise."

The whole sector?  That doesn't seem to be the case with companies like YouTube.com.  Then again, these companies are creating their own categories in media. 

So it's ironic that today Ted Turner left the board of Time-Warner.  Of course, he's legendary in media.  He did things that many thought were absolutely crazy – such as launching a 24-hour news channel.

No, the media industry is not in a funk.  It's just the "malaise" of CEOs like Parsons.  They don't have the guts – like Ted Turner – to make big bets. 

As for Parsons, he is doing the typical things:  small acquisitions, stock buybacks, division sell-offs, and so on.

Why not try something daring?