CNN, 'Suicide Squad' boost Time Warner Q3 earnings

Time Warner, the media giant that has a deal to be acquired by AT&T, said Wednesday its third quarter net income rose 41% as all major businesses, including Warner Bros. film studio, CNN and HBO, generated higher revenues.

Net income totaled $1.5 billion, compared with $1 billion a year ago.

Earnings per share, after adjusting for some items, were $1.83, better than the $1.37 estimated by analysts who were polled by S&P Global Market Intelligence.

Time Warner also raised its full-year adjusted earnings per share guidance to a range of $5.73 to $5.83, higher than the $5.35 to $5.45 range it issued in the second quarter.

Third quarter revenue grew 9% to $7.2 billion.

“We had a strong third quarter, which keeps us on track to exceed our original 2016 outlook," Time Warner Chairman and CEO Jeff Bewkes said in a statement. "Combining with AT&T is the natural next step in the evolution of our business and allows us to significantly accelerate our most important strategies.”

Shares of Time Warner rose 0.2% to $88.44 in pre-market trading.

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Revenue at Turner, the company's largest unit that operates TNT, TBS and CNN, increased 9% to $2.6 billion as advertising sales and subscription revenue rose. With the presidential election season in full swing during the quarter, CNN was a key growth driver. "Advertising revenues benefited from growth at Turner’s domestic news business," it said. CNN "had its most-watched quarter in eight years among total viewers."

HBO revenue rose 4% to $1.4 billion as more customers signed up to subscribe the premium cable channel. The increase in subscription revenue was attributed to higher domestic rates and international growth. The premiere episode of Westworld, its new show about a robot theme park, totaled more than 13 million viewers, putting it ahead of the premieres of True Detective and Game of Thrones.

Revenue at Warner Bros., its film and TV studio, jumped 7% to $3.4 billion. Higher movie box office sales were driven by the releases of Suicide Squad, The Legend of Tarzan, Sully and Lights Out.

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In a call with analysts Wednesday, Bewkes elaborated on his decision to sell the company to AT&T for $85.4 billion despite inevitable scrutiny from regulators and instant pushback from consumer activists and politicians.

The merger brings the companies "closer to consumers and allows us to go where they are going," he said. "That is increasingly mobile and increasingly multi-platform, increasingly on-demand. And it’s increasingly through new services and packages."

In trying to assuage antitrust concerns, Bewkes and AT&T's CEO, Randall Stephenson, have been asserting that the companies aren't competitors and operate in different sectors. Stephenson called it an acquisition of "a supplier."

But critics say combining AT&T, the second largest wireless carrier and owner of DirecTV, with the media content company that owns HBO, TNT and Warner Bros. would squeeze other cable network operators, pay-TV distributors and streaming video companies in fees, content distribution negotiations and other digital rights.

Paul Cappuccio, Time Warner's general counsel, largely repeated his boss's argument Wednesday during the analyst call. "It’s not a concentration of anything," he said. "We feel very good about the deal being pro-competitive."

Contributing: Mike Snider