Disappointing show by HBO, Turner drags down Time Warner
By Abhirup Roy
(Reuters) - Time Warner Inc (TWX.N: Quote) reported a bigger-than-expected drop in quarterly revenue as subscription revenue for its cable channel HBO and Turner television network disappointed Wall Street, sending the company's shares down as much as 9.8 percent.
Revenue at Warner Bros, the company's movie studio, also fell 13 percent, hurt by a lack of hit movie releases and a strong dollar, overshadowing a quarterly profit beat and an increased profit forecast for the year.
The company's shares fell to $57, their lowest since March 2013, before paring most of the losses to trade at $60.78, down less than 4 percent.
While revenue in HBO and the Turner division rose slightly, several analysts said subscription revenue in these businesses were below their expectations.
Subscription revenue for HBO, home to shows such as "Game of Thrones", rose 3 percent and remained unchanged at Turner, which includes the cable channel CNN.
Jefferies analysts expected HBO subscription revenue to grow 4 percent and Turner's to grow 1 percent.
"We continue to expect domestic subscription revenue growth to accelerate into the low teens starting in the first quarter," Chief Financial Officer Howard Averill said on a conference call with analysts.
Investors and analysts worry that companies such as Time Warner and Walt Disney Co (DIS.N: Quote) are being abandoned by "cord cutters," especially younger viewers who are shifting to online services such as Netflix (NFLX.O: Quote) and Hulu. Continued...