NEW YORK, N.Y. – Time Warner said Wednesday that its third-quarter earnings grew 2 per cent, as a strong performance in its cable television channels offset declines in the Warner Bros. movie business following the final Harry Potter movie last summer.
Net income was $838 million, or 86 cents per share, higher than the 82 cents expected by analysts surveyed by FactSet. That compares with $822 million, or 78 cents a share, a year ago.
Revenue fell 3 per cent to $6.84 billion, short of the $6.89 billion expected.
Television networks such as HBO and TBS saw 7 per cent growth in the fees paid by cable and satellite distributors to carry the channels. The company said last month’s extension of rights to carry Major League Baseball games will help it command higher fees as existing deals expire.
Time Warner said the success of “The Big Bang Theory” reruns on TBS is helping to lift the channel’s entire schedule, as the network can promote new shows during commercial breaks. But the timing of certain sports events shown on Turner channels hurt advertising revenue, which fell 1 per cent despite better rates in the U.S. It was also hurt by the shutdown of some channels overseas and by changes in currency-exchange rates, as ad sales made abroad converted into fewer dollars.
The Warner Bros. studio had a strong quarter with the release in theatres of the latest Batman movie, “The Dark Knight Rises.” But that wasn’t enough to match the comparison period in 2011, which benefited from “Harry Potter and the Deathly Hallows: Part 2” and license fees for “The Big Bang Theory” and “Friends” in reruns. The recent quarter saw an increase in video-on-demand revenue.
At the Time Inc. publishing business, revenue fell 6 per cent as the company made less money from newsstand sales and advertising.
Time Warner Inc. also kept its outlook for the year. It said adjusted per-share profit will grow by a low double-digit percentage from $2.89 last year. The company said “Argo” was doing well in theatres this quarter, and it should get a boost from the long-awaited launch of “The Hobbit” movies next month.
On a conference call with analysts, CEO Jeff Bewkes identified challenges. He said the CNN news business benefited from coverage of the elections and Superstorm Sandy, but it needed ways to do well when there isn’t breaking news. The Time Inc. magazine properties also face challenges transitioning to a digital world. Bewkes said the company will continue to control costs while trying to tap the magazines’ brand recognition and access to consumer data to develop new products and advertising opportunities.
Time Warner’s stock increased $1.19, or 2.8 per cent, to $44.30 in late morning trading Wednesday. Its share are near their 52-week high of $46.59 on Oct. 9. Its shares traded as low as $32.09 last November.