This story has been updated with information from Time Warner's second-quarter conference call.
NEW YORK ( TheStreet) -- Time Warner (TWX - Get Report) CEO Jeff Bewkes responded Wednesday to the one big question mark on his company's second-quarter earnings: the lower-than-expected growth in revenue from affiliate fees.
Affiliate fees grew 4% in the quarter, lower than a consensus estimate of 5%. BernsteinResearch media analyst Todd Juenger said the explanation for the lower-than-expected total may reside in an overall decline of subscribers at the cable-TV operator but for the moment, it's hard to tell.
Bewkes told the inquiring analysts on the conference call -- reporters are forbidden from asking questions on the quarterly gathering -- that Time Warner recently signed a distribution deal with a "Top 5" cable/satellite provider and said that the company secured the increase it wanted.That deal gives Time Warner management more confidence that it can secure double-digit percentage increases on a compounded basis for affiliate fees through 2016, said Wells Fargo media analyst Marci Ryvicker in an investor note. Time Warner shares were gaining 1.83% to $65.25 in early afternoon trading as the owner of HBO, TBS and TNT raised its full-year profit guidance and reported second-quarter sales and net income that beat estimates as the company's cable-TV networks and film studios grew more than expected. Earnings on an adjusted basis were 83 cents a share, above consensus estimates of 76 cents for the three-month period ended June 30. Sales also beat Wall Street projections, increasing 10% from the same period a year ago to $7.4 billion; analysts expected revenue of $7.1 billion. Growth for Time Warner came from advertising as Turner Broadcasting, led by CNN and TBS, delivered an 11% increase in ad revenue even as ratings are expected to have declined 4%, according to BernsteinResearch analyst Todd Juenger. Ad sales slipped at TNT and TOON. Time Warner raised its forecast for 2013 earnings per share growth to a percentage in the "mid-teens" from the low double-digits compared to earnings of $3.24 per share which the company reported for 2012. Time Warner finance chief tktk added that third-quarter advertising is forecast to grow in the mid-single-to-high single digits, coming off an 11% increase for the second-quarter. All told, Time Warner's performance was led by its cable-TV networks which posted record quarterly revenue of $3.8 billion. Time Warner's "Man of Steel," "Hangover III" and "The Great Gatsby" produced a 13% revenue increase to $2.9 billion, beating projections. Adjusted operating income across the company increased 25% to $1.5 billion. In something of a surprise, Bewkes said the company had decided to postpone the spin-off of its publishing group Time Inc. until early-2014. The spin-off had been slated for sometime in late-2013. Bewkes said the decision to delay the spin-off was made to give incoming Time Inc. CEO Joe Ripp, hired last month to head the publishing company. There isn't a "rush" to do it, Bewkes said. True to trends throughout publishing, Time Inc., owner of People, Fortune and Sports Illustrated, reported a 5% decline in advertising sales. Revenue was in-line with projections at $833 million. Time Warner shares have risen 37% this year. Written by Leon Lazaroff in New York >To contact the writer of this article, click here: LeonLazaroff.>.
Check Out Our Best Services for Investors
Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
Check Out Our Best Services for Investors
Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
Every recommendation goes through 3 layers of intense scrutinyquantitative, fundamental and technical analysisto maximize profit potential and minimize risk.
Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.