The blockbuster Batman movie "The Dark Knight Rises" didn't open in theatres until the quarter ended. In the second quarter last year, Time Warner Inc. had "The Hangover Part II" in theatres and the next-to-last Harry Potter movie on home video.
Television networks were strong and represented the largest and most profitable part of the company in the second quarter. But gains there weren't enough to offset the declines at Warner Bros. and at the Time Inc. magazine division.
Net income was $430 million, or 44 cents per share, compared with $638 million, or 59 cents per share, a year earlier. Revenue fell 4 per cent to $6.7 billion. That's slightly below analysts' expectations of $6.95 billion, according to FactSet.
Adjusted for one-time items, including the shutdown of channels in India and Turkey, earnings were a penny above expectations at 59 cents per share. Time Warner's stock rose over 1 per cent in Wednesday.
Revenue from Time Warner's television networks grew 4 per cent to $3.6 billion, in part from higher rates paid by cable and satellite TV companies to carry CNN, TBS and other channels. Time Warner also saw growth in HBO subscribers and benefited from higher ad rates and an increase in the number of NBA games shown on its channels. But ad revenue fell at its domestic news networks.
At Warner Bros., revenue fell 8 per cent to $2.6 billion because last year's quarter had strong releases. The declines were partly offset by licensing revenue from cable reruns of "The Mentalist."
Revenue at the Time Inc. magazine division fell 9 per cent to $858 million, reflecting declines in both subscriptions and advertising.
Time Warner also reaffirmed its outlook for the year. The company said percentage growth in adjusted income should be in the low double digits for the full year. Last year, adjusted earnings were $2.89.
The company warned that ad sales may be slower in the current quarter partly because advertisers are diverting money to the Olympics on NBC and its cable networks. It also expects to be showing fewer baseball games during the quarter, but that will be made up with a heavier fourth-quarter schedule.
Meanwhile, Time Warner expects Warner Bros. to do better in the current quarter and says Batman is on track to be the second- or third-highest-grossing franchise ever. It said the latest Batman movie sold more than $535 million in box office tickets worldwide in the first 10 days. "Magic Mike," released just as the second quarter was ending, has sold more than $100 million in tickets in the U.S.
Warner Bros., which also produces television shows for CBS and other networks, got orders for 16 returning series and nine new series on U.S. prime-time schedules during the TV season that starts in September. The company said it has already sold rerun rights to the CBS shows "2 Broke Girls" and "Mike & Molly."
In the longer term, Time Warner expects to boost the fees it gets from Comcast Corp. and other TV distributors for TNT and other channels. The company said many contracts are expiring over the next four years, and based on deals struck so far, U.S. subscription revenue for the Turner channels should grow in the double-digit percentages each year.
Time Warner's stock gained 48 cents, or 1.2 per cent, to close at $39.60 Wednesday.