NEW YORK: Time Warner Inc reported higher-than-expected quarterly profit on Wednesday as revenue from box office hit “Wonder Woman” helped offset declining ad revenue.
The media conglomerate, which is in the process of being bought by AT&T Inc for about $85 billion, said it expects continuing declines in ad revenue this quarter in the face of the growing popularity of online TV and film services, raising concerns from some analysts.
Time Warner’s shares were up slightly at $102.58 on the New York Stock Exchange. Shareholders are set to get $107.50 in cash and AT&T stock in the deal, which is scheduled to close later this year.
Revenue from the company’s Warner Bros unit, which includes the movie business, rose 12.4 percent to $2.99 billion, topping analysts’ average estimate of $2.90 billion, according to data and analytics firm FactSet.
“Wonder Woman,” starring Israeli actress Gal Gadot, grossed about $800 million worldwide through July 31, while revenue from premium cable channel HBO, home to hit fantasy show “Game of Thrones,” rose slightly to $1.48 billion.
Excluding some items, the company earned $1.33 per share, beating estimates of $1.19 per share, according to Thomson Reuters I/B/E/S.
Overall revenue rose 5.4 percent to $7.33 billion, in line with analysts’ expectations of $7.3 billion.
Ads Dip as Viewers Exit
Like its traditional TV business peers, Time Warner has been struggling to keep viewers hooked to its channels as they flock to online streaming services such as Netflix Inc and Amazon.com Inc’s Prime Video, a trend that is taking a toll on ad sales.
Time Warner reported a 6 percent drop in ad revenue in the last quarter, which it attributed partly to having fewer NBA and high-profile college basketball games than a year ago.
It said it expects another low single-digit drop in ad revenue in the third quarter, causing concerns among some analysts that the company’s cable news network CNN is seeing a decline in viewers.
“Apparently the news cycle strength at CNN is not enough to offset ratings pressures at Turner’s domestic entertainment networks,” said Barton Crockett, an analyst at FBR Capital Markets, in a note to clients.
Revenue for Turner, which includes CNN and entertainment channel TNT, rose 3.1 percent to $3.1 billion in the second quarter.
Net income attributable to Time Warner’s shareholders rose to $1.06 billion, or $1.34 per share, in the second quarter ended June 30, from $952 million, or $1.20 per share, a year earlier.
The company reaffirmed its outlook for the full year and said it expects to close its merger with AT&T before the end of this year.