Time Warner’s third quarter earnings bested Wall Street expectations on Wednesday, as its film division powered the company to a 57 percent increase in earnings and brought revenues to $7.1 billion.
The company reported $822 million in third-quarter profits (78 cents a share), up from $522 million (46 cents a share) and better than the prediction of 75 cents a share.
The film division, only one in the company to report a profit increase, had its best quarter ever. Revenues grew by 19 percent and profits improved by a whopping 153 percent. This was due in large part to the success of “Harry Potter and the Deathly Hallows Part 3,” which grossed $1.3 billion at the global box office, making it the third biggest movie in history.
Chairman and CEO Jeff Bewkes also credited the performance of "Contagion" and "Horrible Bosses" in the company's earnings call.
“This was another terrific quarter for us, financially and strategically, putting us on pace to exceed our prior financial goals for the year. Our results demonstrate the success of Time Warner’s focus on investing in great content that audiences love and leading the evolution of how it’s delivered," Jeff Bewkes said in a statement.
The $7.1 billion in revenue also exceeded the street's prediction — $6.98 billion.
This led the company to improve its outlook for the year, predicting growth of earnings per share in the "high teens" as opposed to the low teens.
Though much has been made of the potential impact of the NBA lockout, CFO John Martin said that the company was planning on broadcasting no NBA games in the four quarter and losses would be "immaterial."
The importance of "Harry Potter" to the earnings report raises questions about what Time Warner will do now that the "Harry Potter" franchise has ended. Bewkes tried to quiet any of those concerns.
"While this was the last film in the series, the Harry Potter franchise will live on for a long time," he told analysts.
He pointed to the upcoming DVD release and the behind-the-scene set tour that will hit London in 2012.
The networks division, which includes cable channels like HBO and CNN, did grow revenues by 6 percent thanks to improvements in subscription and advertising revenue, but increased expenses caused income to dip. Bewkes was most optimistic about the syndication performance of Warner Bros. productions, like "The Big Bang Theory," and the potential for new shows such as "2 Broke Girls."
Publishing declined in both revenues and earnings with as subscription and advertising revenues were down.
However, Bewkes touted the digital space as a possible savior, as Time Inc. will be launching tablet versions of at least one magazine every week between now and the end of the year.