Time Warner Beats Expectations
NEW YORK (
) --
Time Warner
(TWX)
saw earnings fall during the third quarter, but beat analyst expectations driven by gains in its networks division.
For the quarter ended September 30, the company saw earnings fall 21.1% to $522 million, or 46 cents per diluted share, compared with earnings of $662 million, or 55 cents per diluted share, in the same period a year ago. Adjusted earnings from continuing operations were 62 cents per diluted share versus 52 cents a share a year ago and ahead of analyst estimates of 53 cents per diluted share.
Revenue rose 1.8% to $6.38 billion from $6.26 billion during the quarter as the company's networks segment offset losses in its remaining segments.
"Time Warner achieved strong performance yet again in the quarter and, with adjusted EPS up more than 35% through the first three quarters, we remain on track for a very strong year," chairman and CEO Jeff Bewkes said. "Our networks businesses delivered robust growth in advertising and subscription revenues in the quarter."
Its networks division, which includes Turner Broadcasting and HBO, saw revenue gain 9% to $3 billion from $2.76 billion. Advertising revenue grew 10% as a result of international expansion while subscription revenue grew 9% on higher subscription rates and consolidation of HBO in Central Europe. Content revenue increased 2% due to higher sales of HBO shows including
True Blood
and
The Pacific
.
Its filmed entertainment segment revenue was flat at $2.78 billion as Warner Bros. continued to benefit from the strong performance of the popular movie
Inception
. Adjusted operating income was down 28% in the third quarter due to the difficult comparisons to the contribution from
Harry Potter and the Half-Blood Prince
in the same period a year earlier, as well as higher print and advertising costs.
Management expects the number of HBO domestic subscribers to decline by about 1.5 million during 2010 but does not expect the decline to have any impact on subscription revenues.
Publishing revenue was down 1.4% as a 5% increase in advertising was more than offset by a 5% drop in subscription revenue as well as a 12% decline in "other" revenues within the publishing segment.
For the first nine months of the year, earnings fell 2% to $1.81 billion, or $1.57 a share, compared with earnings of $1.85 billion, or $1.54 a share, in the same period a year ago.
Revenue rose 4.9% to $19.08 billion from $18.18 billion.
At the end of the third quarter, the company's net debt was $12.5 billion, up from $11.5 billion at the end of 2009. This increase was attributed to its share repurchases and dividends, as well as investment and acquisition spending.
The company raised its full-year outlook to growth in the high 20% area from a 2009 earnings per share base of $1.83.
-- Written by Theresa McCabe in Boston.
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