Time Warner Tops Views as Pay-TV Deals Outpace Cord-Cutting

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  • Subscription revenue rose 14 percent at Turner last quarter
  • Few million people each year ditching cable for online

Time Warner Inc. has an antidote to cord-cutting: squeezing cable and satellite distributors for more and more money.

The media giant, which owns CNN, HBO and Warner Bros., reported fourth-quarter sales and profit that beat analysts’ estimates, largely on the strength of higher fees from pay-TV providers like Comcast Corp. and AT&T Inc., which is seeking to buy Time Warner for $85.4 billion. At Turner, the New York-based company’s cable division, subscription revenue increased 14 percent last quarter, according to a statement Wednesday.

While a few million people each year continue to abandon cable for online services like Netflix Inc., Time Warner’s performance shows how rate increases on pay-TV providers are more than making up the difference.

The results are also an encouraging sign for AT&T, which is trying to create a telecommunications and media empire that will own much of the programming it provides to subscribers of its wireless, internet and pay-TV services. A potential deal would finally give the company a seat on the other side of the negotiating table.

Time Warner Chief Executive Officer Jeff Bewkes said during a conference call that he was “confident” the AT&T deal would be approved by the end of the year.

The shares rose 0.5 percent to $96.67 at 9:42 a.m. in New York.

  • Time Warner posted quarterly profit of $1.25 per share, topping estimates of $1.19 a share.
  • Fourth-quarter revenue was $7.89 billion, beating estimates of $7.73 billion.
  • At Turner, which owns CNN, TBS and TNT, revenue increased 7 percent to $2.8 billion due to higher subscription sales.
  • At HBO, revenue rose 6 percent to $1.5 billion thanks to higher subscription and content revenue. HBO Now, the premium channel’s web-only service, has surpassed 2 million total online subscribers in the U.S., Bewkes said.
  • At Warner Bros., revenue rose 17 percent to $3.9 billion, driven by the release of “Fantastic Beasts and Where to Find Them” and higher revenue from licensing its TV shows.

Watch Next: AT&T CEO: Confidence 'Fairly High' on Time Warner Deal

(Updates with shares trading, comments from CEO on AT&T and HBO subscriber count.)
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