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Time Warner Living the Great Days of Television: Media Roundup

Stocks in this article: TWX FOXA CBS TWC AOL DIS CMCSA AMC

his story has been updated with additional information on Time Warner's revenue, the competitive landscape and the company's share price.

NEW YORK( TheStreet) -- Time Warner  (TWX) gets nearly three-quarters of its operating profit from television, and as television advertising revenue grows along with increased fees from cable-TV operators, CEO Jeffrey Bewkes is proving that the television business is the place to be in the media industry.

Time Warner shares, which has gained 42% this year, slipped 0.8% to $67.69 as the New York-based owner of HBO and TBS posted third-quarter profit that beat analysts' expectations.

Net income from continuing operations excluding some item totaled $1.2 billion, or $1.01 cents a share, compared to $822 million, or 84 cents a share, a year ago. Analysts were expecting net income of $837.05 million, or 89 cents a share for the third quarter, according to a Bloomberg survey. Revenue trailed estimates as Time Warner reported a 0.2% increase in sales to $6.86 billion. Analysts were expecting $6.94 billion.

CBS  (CBS) was falling in after-market trading after the most-watch U.S. television network posted profits for the third quarter that met analyst expectations. Income from continuing operations totaled $469 million, or 76 cents a share, even with the average forecast of 25 analysts surveyed by Bloomberg. Revenue grew 11% in the quarter to $3.63 billion, outpacing the average forecast of $3.53 billion. Shares were falling 1.8% to $58.55 at 4:45pm New York time.

Cable-TV companies are increasing the fees they pay to content producers such as Time Warner, reflecting the popularity of shows such as "Behind the Candleabara," "Boardwalk Empire" and "Game of Thrones."

The jump in Time Warner's profit was fueled by a 5% increase in revenue from Time Warner's television networks boosted by an 11% gain in advertising. Even CNN, historically a laggard, has begun to show signs of a rebound. the 24-hour news network posted a 15% increase total day ratings among 25 to 54 year-old. HBO's results were boosted by Time Warner's acquisition of partner's interests in HBO Asia and HBO South Asia (collectively, "HBO Asia") in September 2013. As a result, Time Warner took full ownership of HBO Asia, a development to be reflected in the company's fourth-quarter results.

Adjusted operating income increased 8% to $1.7 billion.

CEO Jeffrey Bewkes has won investor support for his successful moves spinning off  Time Warner Cable (TWC) and  AOL (AOL) with  Time Inc.scheduled for the second quarter of 2014. The spin-offs have allowed Bewkes to focus on the company's television and movie businesses.

Investors have also benefited from Bewkes decision to use free cash flow to repurchase the company's shares -- 31% of shares outstanding over the past five years.

By Leon Lazaroff in New York

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