Time Warner said third-quarter profit jumped 80 percent on rising sales at its cable-television unit. The company will more than double...
Time Warner said third-quarter profit jumped 80 percent on rising sales at its cable-television unit. The company will more than double share buybacks to $12.5 billion.
Chief Executive Officer Richard Parsons increased the stock-repurchase plan from $5 billion after billionaire investor Carl Icahn pressured the company to bolster its share price. Parsons said Wednesday on a conference call that other large shareholders told him acquiring stock was the best use of the company’s cash.
Profit from Time Warner, the world’s largest media company, beat analysts’ estimates, driven by a 15 percent jump in earnings at the New York-based company’s cable unit, which added 149,000 digital-TV subscribers.
Profit also rose at the America Online Internet service and cable channels including HBO and CNN. Icahn is seeking a spinoff of the cable systems to lift the shares, which through yesterday have fallen 8 percent this year.
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Time Warner, which also owns the Warner Bros. film studio, reported third-quarter net income of $897 million, or 19 cents a share, compared with $499 million, or 11 cents, a year earlier, when the company had costs of $500 million to settle accounting probes. Sales gained 6 percent to $10.5 billion, the company said.
Profit beat the average estimate of 17 cents from 24 analysts polled by Thomson Financial.
Shares of Time Warner rose 33 cents to $17.90 Wednesday. Time Warner Cable added 240,000 digital phone subscribers during the quarter, raising the total to 854,000, and signed up 234,000 fast Internet access customers for a total of 4.6 million.
The digital-phone customer number fell short of estimates by Merrill Lynch analyst Jessica Reif Cohen, who expected 250,000 new subscribers.
The Internet-access gain was higher than her forecast of 195,000.
Time Warner plans to trade off 16 percent of the cable business to the public next year after it completes the acquisition of systems from Adelphia Communications. Parsons said Wednesday on a conference call that Time Warner may sell a larger stake later.
Parsons said he has spoken with most of Time Warner’s large shareholders, who told him buying shares is “the most compelling use of our capital.”
Icahn didn’t immediately return a call and e-mail seeking comment.
Time Warner is also in “serious discussions” with a number of potential partners on selling a stake in AOL, Parsons said, declining to name them.
The company held discussions with Microsoft and with Google, a person familiar with the situation said last month. Comcast, based in Philadelphia, is also in discussions with Time Warner to join Google in a common bid for a stake in AOL, people familiar with the talks said.
AOL ended the quarter with 20.1 million U.S. subscribers, down from 26.7 million three years ago.