Time Warner profits top forecasts

By Hibah Yousuf, staff reporter


NEW YORK (CNNMoney.com) -- Time Warner Inc. posted a second-quarter profit Wednesday that rose from a year ago and beat Wall Street's expectations. It also boosted its full-year outlook.

The New York-based parent company of CNNMoney.com and Fortune said its net income rose to $562 million, or 49 cents pare share, up 7.2% from a year ago.

Adjusted operating income, a commonly used profit metric for media companies, rose 15% to $1.2 billion, or 50 cents per share. Analysts polled by Thomson Reuters were looking for earnings of 45 cents per share.

During a conference call with analysts, Time Warner chief executive Jeff Bewkes said the earnings growth was thanks to "an improved ad environment and continued cost controls."

Time Warner's (TWX, Fortune 500) sales rose 8% to $6.4 billion, topping analysts' forecasts of $6.2 billion.

The media conglomerate's revenue increased at its highest rate in two years, Bewkes said, as advertising sales rose 11% during the quarter, and its film and television divisions delivered strong performances.

Investors welcomed the news, as the company's shares rose nearly 1% in late morning trading.

"Time Warner delivered a nice, clean beat for the quarter, and there's not much negative," said David Bank, analyst at RBC Capital Markets. "Demand is coming back on the advertising front more strongly than we expected."

Revenue rose 11% at the company's television networks, which include CNN, HBO and other Turner stations. Sales were boosted by a 9% rise in cable subscriptions and a 14% increase in advertising revenues, which Bewkes said is the highest increase in years.

Revenue at Warner Bros., the company's filmed entertainment segment, climbed 8%, led by the box office performance of "Clash of the Titans" and "Sex and the City 2," the company said. But the division's operating profit slipped 2%, as sales were offset by higher production and advertising costs.

The steeper costs during the quarter were likely due to marketing for Warner Bros.' latest theatric hit "Inception," said Miller Tabak & Co. analyst David Joyce. He expects that the movie's success will help the company post strong results for the third quarter.

Revenue at Time Warner's publishing division, Time Inc., was virtually unchanged, despite a 4% increase in advertising sales. Overall revenue failed to grow primarily due to flat subscription growth and an ongoing impact from the sale of Southern Living at Home last fall.

But due to substantial reductions in cost, including lower pension expenses, the publishing unit's operating profit surged 50%.

Time Warner Chief Financial Officer John Martin said during the call that magazine subscriptions will likely remain under pressure during the second half of the year, but costs will continue to be lower than a year ago.

For the full year, the media giant said it expects earnings to be up at least 20% from $1.83 per share earned in 2009. Last quarter, the company said it expected growth to be "at least in the mid-teens."

Time Warner has been refocusing its businesses for the past couple of years. It spun off Time Warner Cable (TWC, Fortune 500) and the underperforming online company AOL (AOL), which reported a $1.1 billion loss for the second quarter Wednesday.

Time Warner's report comes a day after rival CBS Corp (CBS, Fortune 500) also said that profits and sales rose during the second quarter and topped forecasts.

News Corp. (NWSA), which reports after the market closes Wednesday and Viacom (VIAB, Fortune 500), which reports Thursday, are also expected to post higher profits compared to a year ago. Walt Disney Co. (DIS, Fortune 500) results are due next week, and it too is also forecast to deliver an increase in earnings.  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,432.96 24.42 0.15%
Nasdaq 4,093.86 -1.66 -0.04%
S&P 500 1,867.20 2.35 0.13%
Treasuries 2.70 -0.02 -0.77%
Data as of 10:30am ET
Company Price Change % Change
Facebook Inc 60.14 1.20 2.04%
Micron Technology In... 24.78 0.88 3.66%
Bank of America Corp... 16.09 -0.06 -0.36%
Pfizer Inc 30.67 0.42 1.39%
Newmont Mining Corp 24.97 1.43 6.07%
Data as of 10:15am ET
Sponsors

Sections

On eve of hearing UAW says it will no longer challenge loss in organizing election at Volkswagen's only U.S. plant. More

The human toll of the 'coverage gap' can be found all too easily in Hidalgo County in Texas, one of 24 states that opted out of expanded Medicaid under Obamacare. More

Schwinn, Trek and Cannondale are all iconic American bicycle brands. But none of them are made in the United States. More

Getting people to donate money is a big business, and some universities, hospitals and other nonprofits are rewarding their top fundraisers with as much as $1 million to bring in the big bucks. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.