Time Warner Inc.
) posted second-quarter 2013 earnings of 83 cents a share that
surpassed the Zacks Consensus Estimate of 75 cents and surged
approximately 46% from 57 cents earned in the prior-year quarter
due to strength witnessed across Film and TV Entertainment and
Networks segments, and lower shares outstanding.
However, including one-time items, quarterly earnings came in
at 81 cents a share, up substantially from 42 cents earned in the
This Zacks Rank #3 (Hold) stock now anticipates mid-teens
growth in earnings per share for 2013. The current Zacks
Consensus Estimate for 2013 is $3.68, reflecting an increase of
about 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 jumped 10% to
$7,435 million from the prior year-quarter, and came ahead of the
Zacks Consensus Estimate of $7,123 million.
Adjusted operating income increased 25% to reach $1,512
million, whereas adjusted operating margin expanded 200 basis
points to 20%.
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 7% to $3,841 million, driven by growth of 4% in subscription
revenue, 11% in advertising revenue and 5% in content revenue.
Adjusted operating income for the segment increased 13% to $1,265
million attributable to growth in revenue, partially mitigated by
8% jump in programming costs.
Higher subscription revenue was primarily attributed to rise
in domestic rates and international growth. Advertising revenue
gained due to growth witnessed at Turner's domestic entertainment
networks on account of rise in pricing, robust demand for the NBA
Playoffs on TNT and the timing of the 2013 NCAA tournament,
partially offset by shutdown of TNT television operations in
Film and TV Entertainment
segment revenue surged 13% to $2,941 million due to sturdy
theatrical performance of Man of Steel, The Hangover Part III and
The Great Gatsby, rise in international television syndication
and higher subscription revenue from video-on-demand, partly
offset by a fall in domestic television licensing revenue.
Adjusted operating income for the division, which comprises
Warner Brothers, soared 34% to $184 million principally
attributable to revenue growth, partially offset by increase in
associated film costs, and higher advertising and restructuring
and severance charges.
revenue fell 3% to $833 million due to 7% decline in Subscription
revenue and 5% fall in advertising revenue, partially offset by
23% growth in Other revenue. The segment operating income came in
at $124 million, reflecting growth of 28% due to reduced
Other Financial Aspects
Time Warner ended the quarter with cash and cash equivalents
of $2,063 million, long-term debt of $19,129 million and total
equity of $29,783 million.
During the quarter, Time Warner incurred capital expenditures
of $99 million and generated free cash flow of $868 million. From
Jan 1, 2013 through Aug 2, 2013, Time Warner bought back 32
million shares, aggregating $1.8 billion under its share
repurchase program of $4 billion announced in Jan 2013,
overriding the previous authorization.
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