Time Warner posts lower profit as ads disappoint

TIMEWARNER-RESULTS:Time Warner posts lower profit as ads disappoint

 

By Liana B. Baker

REUTERS - Time Warner Inc on Wednesday posted a lower quarterly profit as the media company saw declines in its film and TV entertainment and publishing units, while advertising revenue for its cable networks missed some analysts' expectations.

Time Warner logged a 2 percent increase in advertising for its networks division, which includes TNT, TBS, HBO and CNN. Gabelli & Co analyst Brett Harriss said the modest gain was lighter than he expected, considering Discovery Communications Inc , which owns a stable of cable networks, on Tuesday posted a 7 percent rise in ad revenue.

 

Meanwhile, NBC said on Wednesday it increased cable ad revenue by 4 percent.

"Advertising revenue was a little bit weak," Harris said.

Lazard Capital Markets analyst Barton Crockett said in a research note that advertising growth for the cable networks appeared soft. Time Warner is expected to address its advertising performance in a conference call later on Wednesday. (For a graphic on media companies, click here: http://link.reuters.com/qek79s)

Second-quarter revenue in the networks unit increased 4 percent to $3.6 billion. The unit received a boost from an uptick in subscriptions to HBO but experienced declines in its domestic news networks, which include CNN. Last week CNN chief Jim Walton announced plans to leave the company, which has been plagued by low ratings in recent years.

"CNN is now a pretty small percent of the business but it is a tough spot because it is the middle network between MSNBC and Fox," Harriss said.

Revenue in the film and TV entertainment unit fell 8 percent compared with a year earlier, when it released the movies "Harry Potter and the Deathly Hallows: Part 1" and the sequel to "The Hangover."

Revenue in its publishing unit, whose titles includes Time and Sports Illustrated, declined 9 percent as advertising sales and subscription revenue fell.

Time Warner maintained its full-year forecast for net income to grow in the low double digits. Wall Street analysts are expecting $3.20 per share.

Second-quarter net income was $429 million, or 44 cents a share, compared with $637 million, or 59 cents a share, a year earlier.

Adjusted for charges related to the shutdown of a network in India and some TV operations in Turkey, earnings were 59 cents per share, which beat analysts' estimates by a penny, according to Thomson Reuters I/B/E/S.

Overall revenue fell 4 percent to $6.7 billion. Analysts were expecting $6.94 billion, according to Thomson Reuters I/B/E/S.