This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

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 - Get Report) 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.


WATCH: More market update videos on TheStreet TV | More videos from Brittany Umar

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.

>Contact by Email.

Leon Lazaroff is TheStreet's deputy managing editor.

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,678.70 +6.10 0.03%
S&P 500 2,057.09 +5.27 0.26%
NASDAQ 4,771.7630 +13.8840 0.29%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs