Time Warner Inc. fell as much as 4.1 percent as the media company kept its full-year profit forecast unchanged after earnings topped analysts’ estimates by a wide margin last quarter.
Maintaining the guidance after second-quarter earnings per share came in 22 cents higher than predictions suggests estimates for the second half may be too high, said Paul Sweeney, an analyst at Bloomberg Intelligence. The shares declined 2.7 percent to $85.29 at 9:35 a.m. in New York.
The release of video games like “Batman: Arkham Knight,” as well as licensing of TV shows such as “The Big Bang Theory” and “Seinfeld,” fueled earnings growth last quarter. It also helped offset an 8 percent decline in HBO’s operating income. Profit at HBO was dragged down by higher marketing and technology costs related to the introduction its Web-only version -- HBO Now -- in April.
Profit excluding some items was $1.25 a share, New York-based Time Warner said Wednesday in a statement. Analysts had predicted $1.03, based on the average of estimates compiled by Bloomberg. For 2015, Time Warner continues to expect earnings of $4.60 to $4.70 a share, while analysts anticipate $4.66.
The shares were also probably dragged down by disappointing results from Walt Disney Co., Sweeney said. Disney dropped as much as 8.8 percent after posting lower-than-estimated quarterly sales and cutting its forecast for cable TV profit.
Time Warner Chief Executive Officer Jeff Bewkes’s strategy has been to create original hit shows and acquire sports programming rights to demand higher fees for its TV channels from pay-TV distributors. Bewkes has spun off assets in recent years, shrinking Time Warner down to its Turner cable channels, HBO and the Warner Bros. movie studio.
The company has also been seeking new ways to sell its content online, distributing its Turner channels -- CNN, TNT, TBS and Cartoon Network -- on Dish Network Corp.’s Sling TV service.
Bewkes is trying to further expand the company and prop up the stock price after rejecting a $75 billion buyout offer last summer from Rupert Murdoch’s 21st Century Fox Inc.