Time Warner Q3 Profit Declines, But Results Beat View; Reiterates FY17 Outlook

(RTTNews) - Media and entertainment company Time Warner Inc. (TWX), which has agreed to be acquired by AT&T Inc. (T), on Thursday reported a 7 percent decrease in profit for the third quarter from last year despite higher revenues at all three of its segments. The prior-year period's results were helped by a tax benefit.

However, both revenue and adjusted earnings per share for the latest quarter beat analysts' estimates. In addition, the company reaffirmed its earnings outlook for fiscal 2017.

Third-quarter net income attributable to shareholders declined to $1.37 billion or $1.73 per share from $1.47 billion or $1.86 per share in the prior-year quarter.

The prior-year quarter's results included a net tax benefit of $0.28 per share related to an Internal Revenue Service or IRS-approved tax accounting method change.

Adjusted income from continuing operations was $1.82 per share, compared to $1.83 per share in the prior-year period. On average, analysts polled by Thomson Reuters expected the company to report earnings of $1.59 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter increased 6 percent to $7.60 billion from $7.17 billion last year, reflecting higher revenues at all operating divisions. Wall Street expected revenues of $7.39 billion for the quarter.

Turner revenues increased 6 percent to $2.77 billion, due to increases of 13 percent in subscription revenues and 4 percent in content and other revenues, partially offset by a 3 percent decline in advertising revenues.

Home Box Office revenues increased 13 percent to $1.61 billion, due to increases of 12 percent in subscription revenues and 14 percent in content and other revenues.

Warner Bros. revenues rose 2 percent to $3.46 billion, reflecting higher theatrical and videogames revenues partially offset by lower television revenues.

Theatrical revenues increased due to higher home entertainment and television licensing revenues of theatrical product. Videogames revenues increased primarily due to carryover revenue from "Injustice 2".

Looking ahead to fiscal 2017, Time Warner reiterated its outlook for adjusted operating income to increase in the high single-digits, based on current foreign exchange rates.

Time Warner also continues to expect its pending merger with AT&T to close before year-end 2017.