Time Warner (TWX) reported earnings this morning above the Street’s expectations, and raised its guidance.
The strength of its cable networks made up for weak performances by AOL and publishing.
Adjusted EPS came in at $0.61 versus the Street’s expectation of $0.53. Net income was $661 million.
Revenue came in at $7.1 billion, which is down 6% from last year, but in line with expectations.
Network revenue rose 5% to $2.9 billion. Higher subscription rates at Turner and HBO offset the weakness in advertising.
Filmed entertainment revenue dropped 4% to $2.8 billion. Harry Potter delivered good results, but he doesn’t compare to the Dark Knight, which was out a year ago. Also DVD sales are weaker.
Publishing revenue dropped $204 million, or 18% year over year. There was a 22% drop in ad revenue or -$129 million, reflecting lower print magazine revenues.
AOL revenue is down $235 million, or 23% y/y, to $777 million. Of that, $138 million came from lost subscribers and $92 million came from drops in advertising. AOL’s operating income was down 50% to $134 million.
Free cash flow for Time Warner is $3 billion.
For full year 2009, the company raised EPS coming to $2.05, up from previous guidance of $1.98 and above the Street’s $2.03 estimate, thanks to $100 million in restructuring charges during the fourth quarter. (The layoffs at Time Inc.)
The spin out of AOL is expected to be completed in December. Time Warner anticipates that 2009 EPS for its content group, which is Networks, Filmed Entertainment, Publishing and Corporate to be $1.75.
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