Time Warner Earnings Tops Views

Time Warner Inc.'s profit easily topped Wall Street expectations in the second quarter, as new videogame releases helped drive revenue higher in its Warner Bros. division.

Time Warner, which also owns cable channels HBO, TNT and CNN, has been working to adjust its business model as the Internet remakes the television landscape, in part by targeting so-called "cord-cutters," or people who don't subscribe to pay TV.

In April, the company began selling a broadband-only version of HBO, dubbed HBO Now, through both digital distributors such as Apple Inc. and traditional partners such as Cablevision.

The online HBO offering helps Time Warner compete for the growing audience of people who consume their programming on the Web from Netflix Inc. and others. But the move risks alienating companies that have distributed Time Warner's programming for decades.

Chief Executive Jeff Bewkes said Wednesday that Time Warner is "investing aggressively to position the company for continued growth, including the successful launch of HBO Now."

In the latest quarter, Warner Bros., the largest top-line contributor, saw revenue grow 15% to $3.3 billion. Time Warner said the growth was driven by higher videogame revenue, due to releases of "Batman: Arkham Knight" and "Mortal Kombat X." TV licensing revenue also grew on syndication of "The Big Bang Theory" and subscription video-on-demand licensing of "Seinfeld."

Revenue at Turner grew 2.8% to $2.83 billion as a 48% jump in content revenue, driven by licensing of some content to Hulu, offset a 1% decline in advertising revenue.

HBO revenue inched up 1.5% to $1.44 billion.

In all, for the quarter ended June 30, Time Warner reported earnings of $971 million, or $1.16 a share, up from $850 million, or 95 cents a share, a year earlier. Excluding some items, earnings were $1.25 a share.

Revenue grew 8.2% to $7.35 billion.

Analysts expected earnings of $1.03 a share on revenue of $6.9 billion.

Write to Chelsey Dulaney at [e-mail]

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