Time Warner Inc. (TWX), owner of the TNT, CNN and HBO cable channels, reported second-quarter profit that topped analysts’ estimates, boosted by higher advertising revenue. The company also said it has pushed back its planned spinoff of Time Inc. to early 2014.
Excluding some items, earnings were 83 cents a share in the period, surpassing the 76 cents that analysts predicted on average, according to data compiled by Bloomberg. Network advertising sales rose 11 percent, helped by the National Basketball Association playoffs on TNT and the college basketball tournament, the New York-based company said.
Chief Executive Officer Jeffrey Bewkes has focused Time Warner’s growth strategy on its TV business, which accounts for more than 70 percent of operating income. He announced plans in March to spin off magazine publisher Time Inc. -- the company’s worst-performing division -- after unsuccessful talks to merge the unit with Meredith Corp. (MDP), owner of Ladies’ Home Journal. The spinoff was originally slated for later this year.
“Our networks businesses, Turner and HBO, continued to shine, reflecting the success of our increased investments in distinctive programming that is resonating with audiences, advertisers and affiliates,” Bewkes said in a statement. “TNT and TBS finished the second quarter as the No. 1 and No. 3 ad-supported cable networks in prime time for adults 18 to 49.”
Time Warner shares were little changed in New York trading, closing at $63.84. The stock has climbed 33 percent this year.
The company also increased its full-year forecast, saying adjusted earnings would see percentage gains in the “mid-teens” from a base of $3.24 a share.
Net income increased to $771 million, or 81 cents a share, from $413 million, or 42 cents, a year earlier. Revenue advanced 10 percent to $7.4 billion, topping the $7.1 billion estimate.
Original shows such as “Falling Skies,” “Major Crimes” and “Dallas” helped increase ratings at its cable networks, Bewkes said.
The Warner Bros. division’s sales gained 13 percent to $2.94 billion, lifted by movies such as “Man of Steel” and “The Great Gatsby.” Time Inc.’s sales dropped 2.9 percent to $833 million.
The company boosted its dividend by 11 percent in the first quarter to almost 29 cents a share. The company also has repurchased $1.8 billion in stock in 2013. Those moves will return cash to investors as the company waits to renegotiate programming rights fees with pay-TV systems later this year.
Last month, Time Warner named Joseph Ripp as CEO of Time Inc. ahead of its planned split. Bewkes’s move to spin off the shrinking magazine business and focus on the more valuable television and film divisions mirrors plans by other media companies. News Corp. split in two at the end of June to form separate newspaper and entertainment businesses, and Tribune Co. (TRBAA) announced last month it would spin off its newspapers, which include the Los Angeles Times, while keeping its TV stations.
In July, Bewkes named Chief Financial Officer John Martin to lead its Turner Broadcasting unit, replacing Phil Kent. Bewkes is moving his lieutenants into key posts as the company evaluates possible successors in anticipation of the end of his employment agreement in 2017, when he’ll be 65.
In January, Bewkes named Kevin Tsujihara to lead the company’s Warner Bros. film and TV studio, ending a two-year contest among a number of Warner executives to succeed Barry Meyer.
A few months earlier, Bewkes hired Jeffrey Zucker to lead the ailing CNN after then-President Jim Walton said he would step down, and in September, he named Richard Plepler head of HBO.
“The new generation that has been here is reaching the point in their careers where they can take the next step,” Bewkes said today of the appointments.
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