American cable telecommunications giant Time Warner Cable Inc. raised its full year earnings forecast on Wednesday, but posted a third quarter income decline of 18% as severance and operating costs offset increasing revenues.
The firm that owns CNN and HBO said adjusted earnings for the full financial year will increase by a “high teens” percentage, compared to the “low teens” cited in its previous guidance.
Shares in the New York City-based company increased 2.4% on Wednesday to $76.73.
Net income in the third quarter came in at $967 million, compared to $1.18 billion in Q3 2013. EPS (earnings per share) were $0.97, after adjusting for some items, which was higher than analysts’ estimates averaging $0.94.
Total revenues in Q3 2014 increased by 3.3% to $6.2 billion, mainly driven by more subscribers ordering HBO and the higher fees that pay-TV firms are now paying to carry its channels.
Time Warner owns several household-name channels, which among other things broadcast sought-after live sports matches. HBO produces popular and critically acclaimed shows. NBA basketball can be viewed on TNT, while Major League baseball is broadcast on TBS.
With hits like Silicon Valley, True Detective and Game of Thrones, HBO led the industry with 99 Primetime Emmy nominations, which were more than twice as many as its nearest rival for the second successive year, the company said.
After succeeding in pushing away 21st Century Fox in a $80 billion acquisition attempt, Jeff Bewkes, Time Warner’s Chairman and CEO has been under intense pressure from investors to show that he can maintain and increase earnings.
Mr. Bewkes had insisted that Time Warner was better off as a standalone company. He believes things are now going his way.
Mr. Bewkes said:
“We’ve refocused the company over the past few years to aggressively pursue the huge global opportunities we see in video content. And once again, we are seeing the benefits of our increased investments in great content and storytelling.”
Its cable network unit, Turner Broadcasting, posted a third quarter revenue increase of 5% to $2.4 billion. This was mainly driven by a 10% rise in subscription revenues plus a 17% increase in content revenues from satellite and cable companies. However, advertising revenues declined by 2%.