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Time Warner Earnings Beat Estimates on TV-Advertising Gains

Pedestrians walk past the Time Warner Center building in New York. Photographer: Jin Lee/Bloomberg
Pedestrians walk past the Time Warner Center building in New York. Photographer: Jin Lee/Bloomberg

May 2 (Bloomberg) -- Time Warner Inc., the owner of movie, television and publishing businesses, reported first-quarter earnings that beat analysts’ estimates on TV-advertising gains.

Earnings excluding some items rose to 67 cents a share, the New York-based media and entertainment company said today in a statement. Analysts predicted 64 cents, the average of estimates compiled by Bloomberg. Sales also exceeded projections.

Time Warner, led by Chief Executive Officer Jeffrey Bewkes, derives more than 70 percent of its annual operating income from its television business, which produces shows such as the hit series “The Big Bang Theory.” Advertising at television networks increased 6 percent, and subscription fees to carry the company’s cable networks rose 5 percent.

“Cable-network advertising revenue is what matters most, and that 6 percent growth was ahead of our estimates,” Michael Morris, a Davenport & Co. analyst in Richmond, Virginia, said in an interview. He rates Time Warner shares neutral.

The cancellation of HBO’s high-profile gambling series “Luck,” set in the world of horseracing, cost $35 million in impairment expenses, according to Time Warner.

Sales advanced 4.4 percent to $6.98 billion from $6.68 billion a year ago. Analysts estimated $6.82 billion on average.

The company’s filmed-entertainment revenue increased 6.9 percent to $2.78 billion, helped by ticket sales for its February film “Journey 2: The Mysterious Island.” The company’s Warner Bros. film division faces tougher comparisons this year after the final film from the Harry Potter franchise boosted 2011 results.

Time Warner fell 1.7 percent to $37.29 in New York at the close. The stock has risen 3.2 percent this year.

Time Warner’s publishing business, which includes People, Sports Illustrated and Time magazines, declined 3.1 percent.

Net income dropped 11 percent to $583 million, or 59 cents a share, from $653 million, or 59 cents, year earlier.

To contact the reporter on this story: Edmund Lee in New York at elee310@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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