(Adds CEO remarks from conference call, analyst quote, Comcast
By Liana B. Baker
Nov 6 Time Warner Inc's third-quarter profit
beat estimates, driven by growth at its cable networks, and its
chief executive said on Wednesday a new cable package offered by
No. 1 cable operator Comcast would help HBO expand its
Comcast Corp said in October it would offer a
promotion that included HBO, the premium cable channel, and its
HBO Go online service in a pared-down basic cable package of
about 10 channels as well as Internet access for about $50 a
The move was closely watched by investors and analysts, who
see it as a test for HBO to be sold in a different format, and
as a sign that one day customers will be able to buy smaller
packages of channels.
Speaking on a conference call with analysts, Time Warner
CEO Jeff Bewkes said the package "could be an effective
way" for HBO to reach the 8 million or 10 million homes that
currently have Internet subscriptions, but no video service. HBO
is still figuring out how to get a bigger slice of the 60
million to 70 million U.S. customers who pay for a television
subscriptions but don't have HBO.
Finance chief John Martin said the company is seeing "some
encouraging subscriber trends at HBO" that will drive subscriber
revenue to accelerate next year.
Bewkes insisted that if the small cable bundles become
popular, Time Warner Cable's basic channels such as TNT and TBS
would still be included in the packages.
"If there's viability and consumer attractiveness for people
trying to get basically a more focused, more valuable and less
expensive basic cable package, our channels will be in there,"
TIME INC SPINOFF DATE
Bewkes updated the timing for the spinoff of Time Inc,
saying that Time Warner Inc's publishing assets will become an
independent company in the second quarter of 2014. The company
announced the spinoff earlier this year.
On Oct. 31, longtime news executive Norman Pearlstine said
he was leaving Bloomberg LP to return to Time Inc in the newly
created job of executive vice president and chief content
officer, reporting to CEO Joe Ripp.
Revenue at the publishing unit fell 2 percent to $818
million in the third quarter, the company said.
Revenue at its cable business, including Turner Broadcasting
channels such as CNN as well as HBO, increased 5 percent to $3.5
billion. Advertising was up 11 percent to $96 million.
"A strong advertising demand environment has helped," said
Bernstein Research analyst Todd Juenger. "But the main story for
the stock has been, and continues to be, anticipated
acceleration of subscription fees."
Time Warner has forecast significant percentage gains in
subscription fees when it renews contracts with pay TV operators
through 2014 and 2015.
Revenues fell 7 percent to $2.7 billion at its Film and TV
Entertainment unit that includes Warner Brothers. It blamed the
decline partly on a tough comparison to a year ago, when it
benefited from the strong box office from the Batman movie "The
Dark Knight Rises."
Net income for Time Warner was $1.18 billion, or $1.26 cents
per share, up from $822 million, or 84 cents a share, a year
Adjusting for discontinued operations and other items,
earnings per share were $1.01, which beat Wall Street estimates
by 12 cents.
Revenue rose 0.2 percent to $6.86 billion. Analysts
expected $6.94 billion, according to Thomson Reuters I/B/E/S.
Time Warner shares fell 17 cents, or 0.2 percent to $68.06.
(Reporting by Liana B. Baker; Editing by Jeffrey Benkoe)