Potter Finale Earnings Magic for Time Warner

Time Warner Inc. (NYSE: TWX) beat third-quarter earnings
expectations thanks to a little help from its friend Harry Potter.


Record-setting box office sales
for the final installment of the
Harry Potter series played a large role in sending Time Warner’s earnings
up 57 percent in the third quarter. The media giant owns Warner Bros.,
the studio that produced this summer’s “Harry Potter and the Deathly
Hallows: Part 2” blockbuster that grossed more than $1.3 billion
worldwide.

All told, Time Warner reported a profit of $822 million for the quarter,
or 78 cents a share – 3 cents higher than what analysts had forecast. The
company’s revenue rose 11 percent to $7.07 billion – its highest growth
rate in four years.

But Harry’s magic wand wasn’t solely responsible for Time Warner’s killer
quarter. TV license fees from “The Big Bang Theory”, which recently
debuted in syndication on TBS, also helped Time Warner’s film unit more
than double its operating earnings from the previous quarter.

Time Warner’s strong earnings did little for its stock today though.
Shares of Time Warner stock actually tumbled more than 2
percent
in the hours after the company’s earnings announcement this
morning. Slowed growth in its networks unit, which includes HBO and CNN,
and a sharp decline in its publishing business likely contributed to the
stock’s drop.

Its network unit’s operating income, at $1.1 billion, was down 4 percent
from the 2010 third quarter. Lower ad revenue in Time Warner’s publishing
business, Time Inc., resulted in a 12 percent year-over-year drop in that
unit’s operating income.

So while Harry Potter did wonders for Time Warner’s third-quarter
earnings, he was unable to cast a similar spell on the company’s stock.

Published by Wyatt Investment Research at