December 8, 2023

Time Warner Reports 10% Revenue Increase and Raises Its Outlook

The company’s total revenues were $7.03 billion, up from $6.38 billion in the same quarter last year. That beat most analysts’ expectations, as did its net income of $638 million, or 59 cents a share, up from $562 million, or 49 cents a share.

The company had previously expected its adjusted earnings per share to grow by the “low teens” on a percentage basis for the full year. On Wednesday, it said it now believed earnings would grow by “at least low teens.”

Jeff Bewkes, the chairman and chief executive of Time Warner, told analysts that cable advertising and subscription revenues remained strong. He said the company benefited in the second quarter from the release of the hit film “The Hangover Part II” and from sales of HBO shows like “True Blood” and video games like “Mortal Kombat 9.”

Creating new franchises costs money, and Time Warner’s margins were somewhat affected by investments in content rights for the N.C.A.A. basketball tournament and in start-up costs for HBO GO, a streaming library of shows. “These investments both set us up for accelerated earnings growth in the second half of this year and further strengthen our long-term growth prospects,” John Martin, the company’s chief financial officer, said during the conference call with analysts.

Mr. Bewkes cited HBO GO as an example of Time Warner’s efforts to refashion itself for customers who want content digitally. Earlier this year, HBO, which has historically been a profit center for Time Warner, rolled out HBO GO as a free extension for subscribers of the premium cable channel, allowing them to watch virtually every HBO show and feature film via the Internet.

Mr. Bewkes said the extension had been “an even bigger hit than we expected,” with nearly four million downloads of the HBO GO mobile app since May. “Our research shows that 85 percent of GO users are watching much more HBO than they did before,” he said. Later in the year, HBO hopes to extend the service to some Internet-connected television sets and video game consoles.

The networks unit that includes HBO and Turner Broadcasting had revenues of $3.5 billion for the quarter, up 9 percent. Filmed entertainment, which includes Warner Brothers, had revenues of $2.8 billion, up 13 percent. Publishing, which includes Time Inc., had revenues of $946 million, up 3 percent.

Mr. Martin noted that Time Inc.’s margins continue to improve, but cautioned that the unit is ”seeing some softness in both advertising and newsstand sales” in the third quarter.

Time Inc. announced on Wednesday that all of its magazines would be available on tablets by the end of the year. It asserted in a news release that it would be “the first major U.S. magazine publisher to make all of its titles available on all leading tablet platforms, with products designed specifically for this medium.”

Some of its 21 magazines, like People and Sports Illustrated, are already available as digital subscriptions or as single copies on tablets.

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Cable Advertising Helps Time Warner Top Forecast

Time Warner, the media company, posted better-than-expected quarterly results on Wednesday, with revenue rising 6 percent alongside a surge in advertising sales at its cable TV networks.

Time Warner, which owns cable networks like CNN and TBS, as well as magazines and a movie studio, is the latest media company to benefit from the strength of the advertising market. CBS, Viacom and Discovery Communications have all reported exceptionally strong results this quarter.

“I love the advertising numbers,” said Laura Martin, an analyst with Needham Capital. “It was an excellent number — really, they did a good job.”

For the first quarter, Time Warner reported net income of $651 million, or 59 cents a share. This compared with net income of $725 million, or 62 cents a share, in the quarter a year ago.

First-quarter adjusted earnings of 58 cents a share came in 2 cents above analyst expectations.

The decline in profit was largely because of higher programming costs, specifically those related to its deal with CBS to share coverage of the NCAA basketball tournament, which carries costly rights fees.

But the flip side is that the deal helped drive a big jump in advertising sales at its cable networks at a time when corporations appear willing to spend more on national campaigns, particularly when it comes to so-called event programming.

Overall revenue rose 6 percent to $6.7 billion, the media company said. Analysts had expected the New York company to post revenue of $6.44 billion, according to Thomson Reuters.

Stronger TV ad sales were the major contributor to revenue growth. At its cable networks, ad sales rose by 48 percent.

In its movie division, revenue dropped 3 percent to $2.6 billion, partly due to several big hits that came out during the quarter a year ago, including “Sherlock Holmes” and “The Blind Side.”

In publishing, home to Time, Fortune and Sports Illustrated, revenue was basically steady at $798 million.

The company also repeated earlier forecasts that its 2011 earnings would be up from those in 2010 by “the low teens” in percentage growth.

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