Time Warner Profits Gain in First Quarter

Cable network ad revenue down 1%

By Jon Lafayette -- Broadcasting & Cable, 5/1/2013 10:41:05 AM

Time Warner reported a big gain in earnings despite lower ad revenue at its cable network unit.

First-quarter net income was $729 million, or 77 cents a share, up 25% from $583 million, or 60 cents a share, a year ago.

Revenues were $6.9 billion, flat from a year ago.

Revenues were below expectations, but earnings were better than forecast by Wall Street.  Analyst Marci Ryvicker of Wells Fargo said the earnings improvement "was driven mostly by operations expense control."

"We're off to a strong start in 2013, making us even more confident in our full-year outlook," CEO Jeff Bewkes said in a statement. "These results reflect the ongoing strength of our content, particularly in television."

At Time Warner's Network group, which includes Turner Broadcasting and HBO, operating income increased 11% to $125 million. Revenues rose 3% to $3.7 billion.

Ad revenues were down 1%, despite higher pricing at Turner's entertainment networks partly because of the timing of the NCCA Men's Basketball Tournament and declines at the news network due to lower demand.

Subscription revenues were up 5% and content revenues were up 4%.

Tuna Amobi, analyst for Standard & Poor's Capital IQ, said the company beat Wall Street estimates for earnings. He added that the company affirmed its low double-digit earnings per share growth target for 2013, "with pending spin off plans for publishing unit still seen enhancing its long-term growth profile."