Time Warner Q4 Profit Drops, Yet Tops View; Ups Dividend

(RTTNews) - Media and entertainment giant Time Warner Inc. (TWX) Wednesday reported lower profit for the fourth quarter, while revenues grew 5 percent due to growth at Warner Bros., Turner and Home Box Office. Adjusted earnings per share as well as revenue topped Street consensus.

Further, the Board of Directors proposed a double-digit increase in dividend for the fifth consecutive year and authorized a $5 billion share buyback, beginning January 1, 2014. The stock is gaining close to 6 percent in pre-market activity.

CEO Jeff Bewkes said, ''We had another very successful year in 2013, with Turner, Home Box Office and Warner Bros. all posting record profits while also investing for future growth...We also remain on track for the separation of Time Inc. into an independent publicly-traded company during the second quarter of 2014.''

Net income attributable to the company's shareholders declined to $983 million from $1.112 billion in the prior year. Net income per common share declined to $1.06 from $1.15.

Both quarters included items such as asset impairments and gain on operating assets.

Adjusted earnings per share was $1.17, while it totaled $1.16 last year. On average, 28 analysts polled by Thomson Reuters expected earnings of $1.15 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter increased 5 percent to $8.565 billion from $8.164 billion in the prior year. Wall Street expected revenues of $8.36 billion.

Excluding Time Inc., which is being spun off, revenues increased 6 percent from last year.

In Turner, revenues rose 3 percent to $2.5 billion due to a 6 percent growth in Subscription revenues owing to higher domestic rates and international growth, and a 1 percent rise in Advertising revenues that benefited from growth at domestic entertainment networks.

In Home Box Office, revenues rose 6 percent to $1.3 billion due to subscription revenue growth of 8 percent that was partially offset by a 9 percent decrease in Content revenues amid lower home video revenues. The increase in subscription revenues was mainly due to higher domestic rates and the consolidation of HBO Asia and HBO Nordic.

In Warner Bros, revenues increased 7 percent to $4.0 billion, mainly due to stronger theatrical and videogames slates. The quarter included the releases of Gravity and The Hobbit: The Desolation of Smaug and the videogame release of Batman: Arkham Origins.

In Time, revenues were essentially flat at $966 million amid a 6 percent decrease in Subscription revenues.

Last month, the company's Board of Directors authorized $5 billion in share repurchases beginning January 1, which replaced the amount remaining under the prior authorization. On February 4, the Board increased the company's regular quarterly dividend by 10 percent to $0.3175 per share.

Separately, Time Warner provided its full-year business outlook for 2014. As the separation of Time Inc. is expected to be completed in the second quarter, Time Warner's outlook excludes the results of Time for the current and prior years.

The company expects its 2014 full-year percentage growth rate in adjusted income per common share from continuing operations excluding Time to be in the low double digits off a 2013 base excluding Time of $3.51. Wall Street looks for earnings of $4.26 per share.

TWX closed up 1.4 percent on Tuesday at $62.40. The stock is up 5.9 percent in pre-market activity.