The company is being investigated by the Securities & Exchange Commission over advertising deals done between 1999 and 2001, and it said that the $500m represented its best estimates for costs to resolve the issue but that it had not established a reserve fund should any civil litigation result.
Time Warner revealed the information as it published its third-quarter results on Wednesday. It said that operating income fell by 20% to $1.1bn when factoring in the $500m charge. Revenues for the quarter rose by 5% to $10bn.
At the troubled AOL division, revenues were up by 1% to $26m, due to a 44% rise in advertising revenues. Earlier this week, the Washington Post reported that AOL would be cutting 700 jobs, around 5% of its workforce, in order to reduce costs and meet financial targets.
Dick Parsons, chairman and chief executive of Time Warner, said: "While we're continuing to work to resolve the government investigations, we're staying focused on moving the company forward; and this quarter's results demonstrate the broad-based strength of Time Warner's businesses."
The company's filmed entertainment division saw revenue rise 1% on the back of the success of 'Harry Potter and the Prisoner of Azkaban' and the Brad Pitt film 'Troy'. Publishing and television networks, which include HBO, also performed well for Time Warner.
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