Potter-free Time Warner finds growth in cable
Date: November 8 2012
Time Warner says its third-quarter earnings grew two per cent, as a strong performance in its cable television channels offset declines in the Warner Bros movie business following the final Harry Potter movie last summer.
Net income was $US838 million ($A806 million), or 86 cents a share, higher than the 82 cents expected by analysts surveyed by FactSet.
That compares with $US822 million, or 78 cents a share, a year ago.
Revenue fell three per cent to $US6.84 billion, short of the $US6.89 billion expected.
Television networks such as HBO and TBS had seven per cent growth in the fees paid by cable and satellite distributors to carry the channels. The company said last month's extension of rights to carry Major League Baseball games would help it command higher fees as existing deals expire.
The Warner Bros studio had a strong quarter with the release in theatres of the latest Batman movie, The Dark Knight Rises. But that wasn't enough to match the comparison period in 2011, which benefited from Harry Potter and the Deathly Hallows: Part 2 and licence fees for The Big Bang Theory and Friends in reruns. The recent quarter saw an increase in video-on-demand revenue, much of it in licensing fees from Netflix.
At the Time publishing business, revenue fell 6 per cent as the company made less money from newsstand sales and advertising.
Time Warner kept its outlook for the year. It said adjusted per-share profit will grow by a low double-digit percentage from $US2.89 last year. The company said Argo was doing well in cinemas this quarter, and it should get a boost from the long-awaited launch of The Hobbit movies next month.
On a conference call with analysts, chief executive Jeff Bewkes identified challenges. He said the CNN news business benefited from coverage of the elections and superstorm Sandy, but it needed ways to do well when there isn't breaking news.
The Time magazine properties also faced challenges transitioning to a digital world. Mr Bewkes said the company would continue to control costs while trying to tap the magazines' brand recognition and access to consumer data to develop new products and advertising opportunities.