UPDATED: 3:38 p.m. ET
Time Warner profits jumped on a strong performance by the company's cable networks, which have begun the process of renewing carriage agreements at higher rates.
Net income was $771 million, or 81 cents a share, in the second quarter, up 86% from $413 million, or 42 cents per share, a year ago.
Revenues rose 10% to 7.4 billion.
The performance exceeded Wall Street analysts' expectations.
"We had a very strong quarter and first half financially and operationally, putting us on track for another great year," CEO Jeff Bewkes said in a statement. "Our networks businesses, Turner and HBO, continued to shine, reflecting the success of our increased investments in distinctive programming that is resonating with audiences, advertisers and affiliates."
The company increased its full-year business outlook, saying it now expects full year growth in adjusted diluted net income per common share to be in the mid-teens. In May, the company reaffirmed that it expected growth in the low double digits.
"That's a reflection of our performance in the first half and our confidence about how we are positioned for the rest of the year," Bewkes said during the company’s earnings call with analysts.
One of Time Warner’s priorities is getting significantly higher rates as Turner Broadcasting renews its carriage agreements. Bewkes said last month, Turner completed a contract renewal with a "top-five distributor and got the affiliate fee increases we were seeking," he said. "This gives us confidence we'll achieve our long-range targets."
Bewkes said the company is counting on Turner's domestic subscriber revenue to grow at a double-digit rate between 2013 and 2016 and that there are a few more deals that are up in 2013. Those new rates will affect revenues in 2014. Bewkes said the company is expecting its biggest increases in 2016.
Adjusted operating income rose 13% to $1.3 billion at Time Warner's networks group. Both Turner Broadcasting and HBO grew at double-digit rates, according to CFO John Martin. Programming costs rose 8% because of higher spending on sports and original programming, but other costs declined.
Revenues rose 7% to $3.8 billion. Subscription revenues rose 4% and content revenues were up 5%. Advertising revenues were up 11% because of higher pricing at Turner's domestic entertainment networks and demand for the NBA Playoffs and the timing of the NCAA Men's Basketball tournament.
"Looking ahead to the third quarter, we continue to see very solid trends here with scatter pricing up double-digits over the upfront," Martin said. "So, as of now, we anticipate mid to high-single digit growth in total networks advertising in Q3."
In the upfront, Bewkes said Turner's entertainment networks got price increases on a CPM basis in the high single digits, on the high end of all TV networks.
In news, Bewkes said "we recently made a number of changes at CNN and we're seeing real progress."
Ratings were up partly because of a high volume of breaking news stories in the quarter, but he also pointed to gains from the new morning show New Day, and Anthony Bourdain’s Parts Unknown.
Warner Brothers revenue from digital SVOD services was just under $70 million and year to date the company has booked $150 million in streaming revenue.
"We continue to expect that SVOD distribution channel will be a strong contributor to our results this year," Martin said.
Time Warner said it repurchased 32 million shares for $1.8 billion this year through Aug. 2
Analysts liked what they saw and heard.
"Nice beat in Q2 results, especially from the all-important networks segment," said Marci Ryvicker of Wells Fargo in a research note. "The update to full year guidance is also a positive (even if just a flow-through of Q2 results), which should help drive the stock today."
Time Warner's shares were trading up 32 cents at $64.40 this afternoon.