Cable TV and Harry Potter lift Time Warner

Time Warner beat analyst expectations with its fourth-quarter earnings thanks to strong results in its cable television networks division and home video sales of the final Harry Potter film.

Revenues for the quarter were up 5 per cent to $8.2bn, with net income up less than 1 per cent to $773m. Adjusted operating income was up 20 per cent to $1.7bn.

The company continued its policy of allocating cash in ways designed to keep shareholders happy. The group increased its quarterly dividend by 11 per cent and authorised a new $4bn stock repurchase programme.

Time Warner managed to improve television advertising results in a difficult climate. Ad revenues for the quarter were up 2 per cent, compared with a 3 per cent decline at Viacom and flat ad sales at Disney’s ESPN.

“Primetime and sports is where our entertainment networks generated the highest volume and the highest pricing,” said Jeff Bewkes, Time Warner chief executive.

Revenues for the networks division, which includes HBO and Turner Broadcasting, were up 5 per cent to $3.5bn thanks to stronger advertising and subscription revenues.

Ratings for the National Basketball Association were also strong, despite the labour dispute that cost the league months of its season last year.

“Every indication is that the lockout did not diminish fans’ enthusiasm at all,” Mr Bewkes said.

John Martin, chief financial officer, said advertisers had been slow to return to NBA broadcasts but that he expected them to come back soon.

Revenues at the networks division also benefited from higher sales of HBO programming. Mr Bewkes said HBO, the premium channel, continued to expand internationally.

He also pointed to HBO Go, the mobile application, as a successful implementation of TV Everywhere, the industry initiative to make programming available to mobile devices.

Warner Bros, the film studio, saw revenues jump 7 per cent to $3.9bn on strong home entertainment sales, led by Harry Potter. Mr Bewkes said he was working to extend the delay before digital distributors and kiosk rental operators offered Warner Bros films, part of an effort to promote the UltraViolet digital film ownership initiative. However, on Tuesday Disney said it did not intend to join UltraViolet.

Harry Potter will continue to benefit Time Warner, as it recently signed agreements to let Universal develop new Harry Potter theme park attractions in Florida and California.

Time Inc, the magazine publishing division, saw revenues decline 1 per cent to $1bn.

For the full year, revenues were up 8 per cent to $29bn, the company’s highest growth rate since 2003.