Time Warner Inc posted a higher-than-expected quarterly profit and raised its full-year earnings forecast in a sign that advertising sales at cable networks such as TNT are recovering and cost cutting at the Warner Bros film studio is paying off.
The surprising results from the media powerhouse - earnings per share beat analyst forecasts by about 15 percent - come during a major repositioning at Time Warner, which has spun off Time Warner Cable and is about to spin off AOL. It shares rose 2.8 percent in premarket trade.
Instead, Chief Executive Officer Jeff Bewkes wants to concentrate on one big business: creating content. He has also taken a hard line on costs, a strategy that is underpinning results and cheering investors, who have driven the stock up by about a third in the last six months.
Third-quarter net income fell to $661 million, or 55 cents a share, from $1.07 billion, or 89 cents a share, a year earlier. Adjusted profit was 61 cents a share, compared with the 53 cents analysts expected, according to Thomson Reuters I/B/E/S.
Revenue fell 6 percent to $7.1 billion, roughly matching Wall Street forecasts. At Time Warner's cable networks, including Turner Broadcasting and HBO, revenue rose to $2.87 billion from $2.73 billion. Subscription revenue rose 9 percent. Advertising sales fell, but only 1 percent, which will probably be taken as a sunny sign in the media industry.
Revenue dropped at Warner Bros and Time Inc, the largest US magazine publisher. It also fell at AOL, the Internet property that Time Warner is spinning off in December. As for the full-year forecast, Time Warner said adjusted earnings per share should rise to at least $2.05, compared with analysts' forecast of $2.02.
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