Time Warner Hikes '13 View After 2Q Profits Soar 87%

By EarningsFOXBusiness

Time Warner (NYSE:TWX) beat the Street on Wednesday with an 87% surge in second-quarter profits, prompting the media conglomerate to hike its full-year guidance.

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The report sent the company’s stock rising 4% in premarket action and underscores why management has decided to spin off the slower-growing publishing assets.

Time Warner said it earned $771 million, or 81 cents a share, last quarter, compared with a profit of $413 million, or 42 cents a share, a year earlier.

Excluding one-time items, it earned 83 cents a share, topping consensus calls from analysts for 76 cents.

Revenue jumped 10% to $7.44 billion, trumping the Street’s view of $7.11 billion.

“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.”

Looking ahead, Time Warner now sees 2013 adjusted EPS rising in the mid-teens from 2012’s $3.24. A 15% increase would translate to non-GAAP EPS of $3.73, which is ahead of current estimates for $3.68.

Last quarter Time Warner’s networks business, which includes Turner Broadcasting and HBO, grew revenue 7% to $3.8 billion as ad sales jumped 11%.

The company cited strong demand for the NBA Playoffs on TNT and the timing of March Madness. Time Warner also said CNN grew ratings by almost 70% in its key demo by taking share from competing news networks.

Film and TV entertainment revenue at Warner Bros. rose 13% last quarter to $2.9 billion thanks to the release of "Man of Steel," "The Hangover Part III" and "The Great Gatsby."

On the other hand, Time Inc.’s revenue dipped 3% to $833 million as ad sales dropped 5% and subscription revenue slid 7%.

Earlier this year Time Warner unveiled plans to spin off Time Inc., which is the parent of Sports Illustrated and other publishing assets.

The move comes after Rupert Murdoch separated News Corp.’s (NASDQ:NWSA) publishing assets from its TV and film businesses, which became 21st Century Fox (NASDAQ:FOX), the parent of FOX Business. 21st Century Fox reported a 16% jump in revenue on Tuesday amid strength from its cable assets like Fox News Channel.

Shares of New York-based Time Warner rallied 4.17% to $66.75 ahead of Wednesday’s opening bell, putting them on track to extend their 2013 surge of 34%.