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Last updated: November 7, 2012 9:08 pm
Revenue growth and cost controls at cable networks such as TBS offset a weaker box office for the Warner Bros film studio to lift Time Warner’s earnings per share by 9 per cent in the third quarter.
Turner’s networks delivered 12 per cent growth in operating income on a 4 per cent sales increase. Jeff Bewkes, the group’s chairman and chief executive, noted that TBS had become the number one primetime network for 18-34 year-old viewers in America.
CNN still faced challenges, he said, adding that he would announce a new leader for the news network by year’s end.
Despite strong ticket sales for The Dark Knight Rises, the latest Batman movie, Warner Bros could not match the performance of the final Harry Potter film a year earlier and reported a 12 per cent fall in revenues and a 38 per cent drop in adjusted operating income.
The weakness in the film division pulled group revenues down 3 per cent to $6.8bn for the quarter. Group operating income fell only 1 per cent to $1.6bn thanks to growth in networks, where Mr Bewkes noted operating expense growth had risen just 2 per cent to date this year.
The Time Inc magazines division, led by Laura Lang, reported a modest 2 per cent rise in adjusted operating income despite a 6 per cent decline in revenues, driven by subscription and advertising falls in what executives called “a very tough environment”.
Time Warner shares were up 4.2 per cent at $44.91 in late afternoon trading in New York as analysts said the group’s networks had performed above expectations. Subscriber trends at HBO, the premium channel group known for Game of Thrones, were “the best they’ve been in years,” Mr Bewkes said.
Mr Bewkes said investments in premium content would “continue paying off” in 2013 and beyond. He highlighted hit TV shows such as The Big Bang Theory and Revolution and deals to lock in “must-have programming” such as TBS’s new contract with Major League Baseball until 2021.
Weak broadcast ratings so far this season were partly a result of consumers viewing shows on other platforms, Mr Bewkes said – but video-on-demand was increasing the value of hit shows.
Weakness in Europe meant international advertising revenues would probably be down again in the fourth quarter, but “with one quarter left to go, we’re on track for another strong year,” he said.
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