Time Warner profit dips, but ad sales surge
NEW YORK (Reuters) - Time Warner Inc posted better-than-expected quarterly results on Wednesday, with revenue rising 6 percent alongside a surge in advertising sales at its cable TV networks.
Time Warner, which owns cable networks such as CNN and TBS, as well as magazines and a movie studio, is the latest media company to benefit from the strength of the advertising market. CBS Corp, Viacom Inc and Discovery Communications have all reported exceptionally strong results this quarter.
"I love the advertising numbers," said Laura Martin, an analyst with Needham Capital. "It was an excellent number -- really, they did a good job."
For the first quarter, Time Warner reported net income of $651 million, or 59 cents per diluted common share. This compares to net income in the prior year quarter of $725 million, or 62 cents per diluted common share.
First-quarter adjusted earnings of 58 cents a share came in 2 cents above analyst consensus expectations.
The decline in profit was largely due to higher programming costs, specifically those related to its deal with CBS to share coverage of the NCAA basketball tournament, which carries costly rights fees.
But the flip side to the deal is it helped drive a big jump in advertising sales at its cable networks at a time when corporations appears willing to spend more on national campaigns, particularly when it comes to so-called event programming.
Overall revenue rose 6 percent to $6.7 billion, the media company said on Wednesday. Analysts had expected the New York company to post revenue of $6.44 billion, according to Thomson Reuters I/B/E/S.
Stronger TV ad sales were the major contributor to revenue growth. At its cable networks, ad sales rose by 48 percent.
In its movie division, revenue dropped 3 percent to $2.6 billion, partly due to several big hits that came out during the quarter a year ago, including "Sherlock Holmes" and "The Blind Side."
In publishing, home to Time, Fortune and Sports Illustrated, revenue was basically steady at $798 million.
The company also repeated earlier forecasts that its 2011 earnings would be up from those in 2010 by "the low teens" in percentage growth.
Shares of Time Warner are up 17 percent this year, far outpacing the broader S&P500.
(Additional reporting by Jennifer Saba; Editing by Derek Caney)
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