Time Warner Inc.
) posted first-quarter 2013 adjusted earnings of 82 cents a share
that surpassed the Zacks Consensus Estimate of 75 cents and
surged approximately 22% from 67 cents earned in the prior-year
quarter due to strength witnessed across Networks segment and
lower shares outstanding.
However, including one-time items, quarterly earnings came in
at 75 cents a share, up 27% from the year-ago quarter.
This Zacks Rank #3 (Hold) stock continue to project low
double-digit growth rate in earnings per share for 2013. The
current Zacks Consensus Estimate for 2013 is $3.68, reflecting an
increase of 12% year-over-year. The company's investments in
content and technology in the recent years have boded well.
Time Warner's total revenue in the quarter slipped marginally
by 0.6% to $6,939 million from the prior year-quarter
attributable to revenue declines across Film and TV Entertainment
and Publishing units, partially offset by growth witnessed in
Networks segment. The reported revenue also fell short of the
Zacks Consensus Estimate of $7,162 million.
Adjusted operating income increased 7% to reach $1,440
million, whereas adjusted operating margin expanded 140 basis
points to 20.8%.
In a strategic move to unlock the value of its core business
activities, Time Warner decided to go ahead with its plan to spin
off Time Inc. magazine into a separate, publicly traded company.
The move to shed Time Inc. followed the negotiation between Time
) to create a magazine based company, which eventually did not
The decision would facilitate Time Warner to concentrate
purely on television networks and film and TV production
businesses. The decision would be accretive to the shareholders
of Time Warner in the same fashion, when this diversified media
Time Warner Cable Inc.
) into independent companies.
division's revenue, which includes Turner Broadcasting and HBO,
rose 3% to $3,695 million, driven by growth of 5% in subscription
revenue, partially offset by declines of 1% in advertising
revenue and 4% in content revenue. Adjusted operating income for
the segment increased 7% to $1,288 million attributable to growth
in revenue and flat programming costs.
Higher subscription revenue was primarily attributed to rise
in domestic rates, strength seen across HBO and international
growth. Advertising revenue gained due to growth witnessed at
Turner's domestic entertainment networks on account of rise in
pricing, offset by the timing of the 2013 NCAA tournament and
fall in news networks due to cease of Turner's general
entertainment network, Imagine, in India and shutdown of TNT
television operations in Turkey.
Film and TV Entertainment
segment revenue dipped 4% to $2,681 million due to lower
theatrical performance and decreased television licensing
revenue. These were partially offset by rise in home video
revenue from the sturdy performance of
The Hobbit: An Unexpected Journey
Adjusted operating income for the division, which comprises
Warner Brothers, soared 23% to $265 million principally
attributable to higher contributions from
The Hobbit: An Unexpected Journey
and fall in print and advertising expenses. However, revenue
decline acted as a deterrent.
revenue fell 5% to $737 million due to 11% decline in
Subscription revenue and 10% in other revenue, partially offset
by 2% growth in advertising revenue. The segment registered an
adjusted operating loss of $9 million compared with adjusted
operating income of $39 million.
Other Financial Aspects
Time Warner ended the quarter with cash and cash equivalents
of $2,493 million, long-term debt of $19,125 million and
shareholders' equity of $29,991 million.
During the quarter, Time Warner incurred capital expenditures
of $85 million and generated free cash flow of $935 million. From
Jan 1, 2013 through Apr 26, 2013, Time Warner bought back 16
million shares, aggregating $868 million under its share
repurchase program of $4 billion announced in Jan 2013,
overriding the previous authorization.
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