Time Warner beats estimates; sees lower advertising

Wed May 3, 2017 11:29am EDT
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By Jessica Toonkel and Rishika Sadam

(Reuters) - Time Warner Inc (TWX.N: Quote) reported a better-than-expected quarterly profit, as revenue from box office hits including "The LEGO Batman Movie," and "Kong: Skull Island" helped offset declining ad sales.

Revenue from the company's Warner Bros film studio jumped 8.2 percent to $3.37 billion.

Excluding items, Time Warner earned $1.66 per share, beating the average analysts' estimate of $1.45 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 5.8 percent to $7.74 billion, surpassing analysts' expectations of $7.67 billion.

Time Warner, which is being bought by AT&T (T.N: Quote), saw an increase in subscribers in the first quarter at its premium cable channel HBO, making up for a 2 percent decline in ad revenue at its Turner networks. Time Warner said it was on track to close its merger with AT&T before the end of 2017.

The company said it expected total advertising revenue for Turner, which includes CNN and Cartoon Network, to be down again this quarter, a challenge that its peers also face. Comcast Corp (CMCSA.O: Quote) announced a decline in ad revenue when it released first quarter earnings last week.

"Time Warner had a really strong content quarter which is specific to them, but the flip side is that overall trends in television networks look a little soft," said Doug Creutz, an analyst with Cowen and Co.

Turner chair and chief executive John Martin said he expected a "healthy" upfront season as advertisers have started to commit more in recent weeks.   Continued...

FILE PHOTO: A Time Warner logo is seen at a Time Warner store in New York City, October 23, 2016. REUTERS/Stephanie Keith/File Photo