Time Warner 1Q profit rises on better ad revenue

NEW YORK -- Time Warner Inc. said Wednesday that improving results at its cable channels and a couple of popular DVD releases boosted its first-quarter net income by 10 percent.

It also upgraded its outlook for the full year. It said earnings should rise "at least in the mid-teens" on a percentage basis from a year ago, when it posted adjusted earnings of $1.83 per share. Its forecast from February was similar but didn't include the words "at least."

Still, Time Warner shares fell 45 cents, or 1.4 percent, to $32.22 on Wednesday morning amid a broad market decline over European debt worries.

The New York media conglomerate's premium HBO channels took in more from subscription revenue, while its Turner cable channels rode a recovery in ad spending.

The improving ad market and cost cutting also helped Time Warner's publishing segment reverse its losses. The publishing division includes Time Inc. magazines such as Time and Sports Illustrated.

First-quarter results across the media business, including Viacom Inc., Comcast Corp. and News Corp., have brought evidence that companies are more comfortable putting money into marketing their products as the recession fades.

Overall, Time Warner earned $725 million, or 62 cents per share, for the period ended March 31. In the comparable period a year ago it earned $660 million, or 55 cents per share.

Removing one-time items, profit was 61 cents per share.

Revenue climbed 5 percent to $6.32 billion from $6 billion, the biggest increase in almost two years.

"The advertising recovery benefited both Turner and Time Inc., while the continuing popularity of 'The Blind Side' and 'Sherlock Holmes' helped lift Warner Bros.' home video sales," Chairman and CEO Jeff Bewkes said in a statement.

The performance surpassed the expectations of analysts polled by Thomson Reuters, who forecast a profit of 48 cents per share on revenue of $6.25 billion. These estimates generally take out one-time items.

In the network division, which houses HBO and Turner Broadcasting, revenue rose 9 percent. The filmed entertainment unit, which contains Warner Bros., reported a 2 percent revenue increase mainly on its improved home video sales.

Revenue for the publishing division dipped 1 percent, but it had a 5 percent increase in ad revenue and a 2 percent rise in subscription revenue.