Time Warner profits up but shares fall as Fox pulls bid

Time Warner yesterday reported a higher-than-expected quarterly profit and boosted its stock buyback programme but the news failed to prevent its shares from tumbling 11% a day after Rupert Murdoch withdrew his bid for the company.

Revenue from Time Warner’s Home Box Office unit jumped 17% to $1.42bn (€1.06bn) for the second quarter, helped by the popularity of Game of Thrones and other HBO shows.

The company said that the fourth season of Game of Thrones, which ended in June, was the most watched season of an original series in HBO’s history.

The Emmy award-winning fantasy epic had an average gross audience of 19m viewers.

Time Warner’s board said it increased its share buyback programme in June by an additional $5bn on top of the $4bn it allocated for the same purpose. Fox announced a buyback programme on Tuesday of $6bn.

Still, Time Warner shares slumped 11% in morning trading, following Tuesday’s news that Rupert Murdoch’s 21st Century Fox had abandoned its $80bn bid for the company.

The pulled offer means that Time Warner will have to defend its position as a solo company and convince shareholders its stock won’t suffer as a result.

“When faced with a hostile takeover bid, Time Warner did exactly what they should have done. They crushed the numbers,” Michael Nathanson with MoffettNathanson Research wrote in a note to investors.

The company’s Turner Networks unit — home to CNN, TBS, and TNT — also posted an increase in revenue on higher subscription and advertisement sales.

Total group net income rose from $698m to $843m, with revenue up from some $6.61bn to $6.79bn.

The company, which also owns the Warner Bros movie studio, forecast full- year 2014 adjusted profit growth in the low teens in terms of percentage.

Time Warner said in April it expected its full- year adjusted profit to grow in the low- to mid- teen percentage range, or better, for at least the next three or four years.

Reuters