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How 'Lego Movie,' 'Thrones' Carried Time Warner

Stocks in this article: TWX DIS FOXA

NEW YORK ( TheStreet) -- The Lego Movie and HBO's Game of Thrones offset sluggish ratings at TNT and programming expenses to propel Time Warner's (TWX) first-quarter revenue and profits to exceed analyst forecasts for a 21st straight quarter.

You'd think that these number-crunching wizards of Wall Street would have caught onto the wily ways of the world's second-largest entertainment company and its dumb-as-a-fox CEO, Jeff Bewkes.

But there it is: Time Warner posted earnings, excluding some items, of 91 cents a share. Analysts surveyed by Bloomberg had been expecting 88 cents a share. Revenue climbed to $7.5 billion, also beating a consensus analyst estimate of $6.7 billion.

Shares were rising 1.1% to $65.45 in mid-morning trading. Shares are down 6.1% this year after rising 49% in 2013.

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The real story for the quarter was at Warner Bros. where The LEGO Movie, the top grossing domestic film for the there months ended March 30, together with 300: Rise of an Empire powered a 14% jump in sales to $3.07 billion. Bewkes spoke glowingly in an investor conference call about LEGO as the company's newest franchise. Indeed, a LEGO sequel is slated for release in 2017.

Bewkes' talent as an executive, and guardian of the Holy Grail of shareholder equity, has been his success at consistently getting top-dollar for his company's cable programming from pay-TV operators the world over. And true to form, the cable-TV Turner unit, which includes TBS and TNT, reported a 5% gain in revenue to $2.59 billion, spurred in part by a particularly exciting NCAA men's basketball tournament.

Time Warner, like Viacom (VIAB), centers its business on creating content that is accessible on all platforms, while spinning off businesses deemed peripheral. Movies tend toward the so-called "tentpole" variety which play well overseas.

This, of course, is a company that sold its stake in the distribution end of the media food chain back in 2008 - Time Warner Cable (TWC) - and largely got out of the straight Internet business when it spun-off AOL (AOL). Time Warner is also getting out of the print business at the June when it expects to have completed the spin-off of Time Inc.

If there has been a general worry about Time Warner, it's been growth. Bewkes' darling, HBO isn't growing as fast as the meteorite known as Netflix (NFLX) but nonetheless, home video sales of Game of Thrones: The Complete Third Season helped boost HBO's revenue for the quarter by 9% to $1.34 billion.

Earlier this month, Bewkes did something he all but said he'd never do: he cut a deal with a Netflix rival, Amazon's (AMZN) Prime, to get paid $200 million to $400 million for the right to carry The Sopranos, Six Feet Under as well as early seasons of Board Walk Empire and the Wire. That's a lot of money for programming that's long been paid for. It's straight profit. Bewkes once hardened position delighted pay-TV providers which depend on HBO for margin-friendly premium services.

Though the deal with Amazon won't show up on the books until the current quarter is reported this summer, the transaction speaks to Bewkes need to boost HBO's visibility in part to counter Netflix.

Indeed, adjusted operating income excluding Time Inc. rose 12% to $1.6 billion. The company repurchased 20 million Time Warner shares in the first quarter for $1.3 billion through April 25.

-- Leon Lazaroff is TheStreet's deputy managing editor.

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Leon Lazaroff is TheStreet's deputy managing editor.

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