Time Warner profit rises 44% on growth at Turner, HBO networks; tops most forecasts
Entertainment conglomerate Time Warner Inc. said Wednesday that its third-quarter profit jumped 44% on improved advertising sales and increased subscription revenue at its cable networks and one-time items. Its adjusted earnings blew past most analysts’ estimates.
The company said it earned $1.18 billion, or $1.26 a share, compared with a profit of $822 million, or 84 cents, in the year-ago period. Excluding items, Time Warner would have earned $944 million, or $1.01 a share, in the latest three months.
Revenue was just about flat at $6.86 billion.
Analysts polled by Thomson Reuters were expecting a profit of 89 cents a share on revenue of $6.93 billion.
In a Wednesday morning note to clients, analyst Todd Juenger of Sanford C. Bernstein said he continues to be pleasantly surprised by the cable networks’ ability to keep costs under control. The trend held up in the third quarter, aided by lower programming expenses, but Juenger is somewhat skeptical about much longer the situation will last. “They obviously can’t expect to regularly decrease programming expense, and in fact all indications are they expect the run-rate to be mid/high-single rates of growth,” he said.
At the company’s Turner Networks, including TNT, TBS, CNN, CNN Headline News, ad revenue climbed on higher rates and greater demand, reflecting the success of TNT’s dramas “Rizzoli & Isles” and “Major Crimes,” among other shows, and TBS’s syndicated reruns of the CBS sitcom “The Big Bang Theory.” CNN’s ratings grew by a double-digit percentage among its target audience, adults 25-54, during the third quarter.
The Warner Bros. film and television studios saw revenue fall 7% on tough comparisons with a year-ago period bolstered by “The Dark Knight Rises,” along with some untimely subscription VOD availabilities and decreased revenue from TV airings of theatrical films.
Full-year 2013 net income is still anticipated to rise from 2012 results by a “mid-teens” percentage.
The company said in March that it would spin off Time Inc., its magazine publishing arm, as part of Chairman Jeff Bewkes’ ongoing effort to focus the company on its TV and film assets. Revenue at Time Inc. declined 2% in the September period.
— David B. Wilkerson