Updates from 9:53 a.m. EDT with comments from Time Warner's CEO.

Time Warner's (TWX)  latest earnings shows why AT&T (T) wants to buy the media conglomerate, and also why it wanted to sell. 

Ten days after agreeing to be acquired by the global telecom operator in a transaction valued at $85.4 billion, Time Warner's third-quarter earnings are certain bolster AT&T's argument that it's justified in paying a hefty premium to acquire HBO, the Warner Brothers film studio and a stable of pay-TV networks led by TNT and CNN.

Indeed, Time Warner's results exceeded the expectations of Wall Street analysts as earnings of $1.87 a share amounted to a stunning 46% increase from the same period a year ago when earnings were $1.25 per share. Analysts had been expecting a per share profit of $1.36.

In a further demonstration of its attractiveness to investors, Time Warner raised its full-year 2016 earnings forecast, adjusted for some charges, to $5.45 to $5.55 a share from $5.35 to $5.45 a share, a modest but positive sign. Revenue of $7.2 billion for the quarter jumped 9% to $7.2 billion, beating a consensus Wall Street projection of $6.97 billion.

The higher-than-expected totals were attributable in part to strong box-office results from Suicide Squad and The Legend of Tarzan and home video sales led by Batman v. Superman: Dawn of Justice and The Conjuring 2. Additionally, Time Warner's pay-TV networks secured accelerating growth from so-called affiliate fees, money that pay-TV operators pay to carry its networks.

Curiously, though, AT&T's much ballyhooed deal proposal, which needs regulator approval to become official, has been treated gingerly by investors. While media investors generally have a high opinion about Time Warner compared to its rivals, questions about securing regulatory approval continue to weight on its shares.

Though AT&T agreed on Oct. 22 to pay $107.50 per share to acquire Time Warner, shares have traded on par with where the stock closed a day before the deal was announced on Oct. 22. Time Warner on Wednesday was little changed at $88.15, a 22% discount to AT&T accepted offer price. Speaking on an investor conference call, Time Warner CEO Jeff Bewkes said he expects the transaction to close by the end of 2017, "if not sooner."

Time Warner general counsel Paul Cappuccio said he had no indication whether the Federal Communications Commission would review the transaction in addition to the Department of Justice.   

But investor reticence to own Time Warner shares appears to have had little impact on operations. Adjusted operating income, a closely watched metric, grew 12% to $2.1 billion while revenue at Warner Bros revenue grew 7% to $3.4 billion bolstered by box-returns from Sully and Lights Out

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