November 5, 2014 / 12:27 PM / 4 years ago

Time Warner profit beats estimates as subscription fees rise

(Reuters) - Time Warner Inc reported better-than-expected quarterly revenue and profit on Wednesday, helped by higher subscription fees for channels offered by its Turner Broadcasting and HBO.

A woman walks past the Time Warner Center near Columbus Circle in Manhattan, New York in this file photo from July 16, 2014. REUTERS/Adrees Latif/Files

Revenue from Turner Broadcasting, the operator of channels such as CNN, TBS and TNT, rose 5 percent to $2.4 billion in the third quarter.

In a conference call with analysts following the release of the results, the chief executive of Turner Broadcasting, John Martin, addressed Turner’s contract dispute with Dish Network Corp that has affected the satellite TV company’s 14 million subscribers.

Dish has blacked out several of Turner’s networks, including CNN and the Cartoon Network.

The chairman of Dish, Charlie Ergen, on Tuesday slammed Turner and the importance of its networks, particularly CNN.

On Wednesday, Martin said: “We were both disappointed in the very antagonistic and aggressive nature of his comments yesterday.

“We are disappointed particularly given the fact that Dish had previously agreed to our networks’ rates and our carriage proposals weeks ago,” he said.

On Tuesday, Ergen said Dish has a responsibility to shareholders not to do “stupid deals.”

“It’s hard when somebody wants a price increase, double-digit price increase, for something that people are watching half as much as they used to watch. That just doesn’t make sense,” Ergen said.

Time Warner is in the midst of a plan to boost earnings and growth, following the company’s rebuff of a takeover bid from Rupert Murdoch’s Twenty-First Century Fox for $85 per share in the summer.

The plan includes cutting jobs and reducing costs. Time Warner also has announced plans to introduce a stand-alone video streaming product for HBO that will make the channel available to people without cable subscriptions next year.

Few details have emerged about the offering, including the price and potential partners to deliver HBO’s popular programs like “Game of Thrones” with only a broadband connection.

In the third quarter, revenue from the HBO rose 10 percent and accounted for about 21 percent of Time Warner’s total revenue.

Warner Bros, the company’s movie and TV studio unit, reported a 3 percent rise in revenue, helped by subscription video-on-demand from its television products.

Total revenue rose 3.3 percent to $6.24 billion, topping analysts’ average estimate of $6.16 billion, according to Thomson Reuters I/B/E/S.

Time Warner raised its percentage growth forecast for full-year adjusted profit to high teens from low teens. Analysts on average are expecting a profit of $4.01 per share for 2014.

Net income attributable to common shareholders fell to $967 million, or $1.11 per share, in the third quarter ended Sept. 30 from $1.18 billion, or $1.26 per share, a year earlier.

Excluding items, the company earned $1.22 per share, beatings analysts’ forecasts of 94 cents.

Shares of Time Warner were up 2.9 percent at $77.16 in afternoon trading.

Reporting by Abhirup Roy in Bangalore and Jennifer Saba in New York; Editing by Sriraj Kalluvila, Kirti Pandey and Leslie Adler

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