Time Warner Third-Quarter Earnings Rise, Beat Expectations

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Time Warner chairman and CEO Jeff Bewkes

UPDATED: The latest results for the entertainment conglomerate, led by CEO Jeff Bewkes, were once again driven by its TV networks unit.

Time Warner on Wednesday reported higher third-quarter financials, with earnings beating Wall Street expectations.

The entertainment conglomerate, led by CEO Jeff Bewkes, posted earnings of $1.18 billion, or $1.05 billion for continuing operations. In the year-ago period, TW had recorded earnings of $822 million. Wall Street analysts had on average forecast earnings of $835 million.

Revenue of $6.86 billion was comparable to the $6.84 billion from the third quarter of 2012, but came in slightly behind analysts' forecasts of $6.94 billion.

The latest results were once again driven by the company's TV networks unit. Revenue growth in the networks business was offset by declines in the film and publishing units. Adjusted operating profit increased 8 percent to $1.7 billion "due to an increase at the networks segment, partially offset by decreases at the film and TV entertainment and publishing segments," TW said.

TW's third-quarter film unit results included the performances of the theatrical releases of Man of Steel, We’re the Millers and The Conjuring.

“We had another strong quarter and remain on track for another very successful year, thanks to our commitment to great storytelling across the company," said Bewkes, as the company reiterated its full-year earnings outlook. "HBO continued to distinguish itself by receiving 27 Primetime Emmy Awards this year, including 11 for Behind the Candelabra and five for Boardwalk Empire. That was the most of any network for the 12th consecutive year. And Warner Bros. is once again supplying more shows this season to the broadcast networks than any other studio -- including the top two shows on television, The Big Bang Theory and The Voice."

Added Bewkes: "Warner Bros. is also the leading film studio by domestic box office share this year, helped by the third-quarter release of two sleeper hits, The Conjuring and We’re the Millers, as well as the critical and commercial success of our newest release, Gravity. And we’re looking forward to the second release in The Hobbit franchise next month."

TV networks adjusted operating profit rose 12 percent thanks to a 5 percent revenue gain, partly offset by increased restructuring and severance expenses. Programming costs decreased 3 percent, "primarily due to lower costs for acquired films and syndicated series and the timing of originals and sports programming," TW said.

Film and TV entertainment unit revenue dropped 7 percent "reflecting difficult theatrical comparisons to the year-ago period, which included revenues from The Dark Knight Rises, as well as lower television revenue from theatrical product and the timing of subscription video-on-demand availabilities," the company said. "These decreases were partially offset by an increase in television licensing revenue primarily due to the initial domestic off-network availability of The Middle." Adjusted operating profit in the unit declined 8 percent to $302 million amid the lower revenue, partially offset by lower film costs.

E-mail: Georg.Szalai@THR.com
Twitter: @georgszalai