LOS ANGELES (AP) — Time Warner Inc. reports its earnings before the market opens Wednesday. Analysts are looking for profits and revenue to grow on the strength of advertising demand at networks like the Cartoon Network and TBS and better performance of the Warner Bros. movie studio.
WHAT TO WATCH FOR: A few key unknowns will be answered in the earnings results, including how Time Warner was able to recover from the NBA lockout, which delayed the opening of the season by almost two months until late December.
Despite games coming back to its TNT network, Bernstein analyst Todd Juenger said he suspects that advertisers feared a prolonged dispute and committed their dollars to other networks in order to reach men.
Audience size slid at TNT and CNN while growing for networks like TBS and Cartoon. Given strong demand from advertisers the net impact of the ratings trends is unclear.
Meanwhile, Warner Bros. movies generated 23 percent more from the box office in the first quarter than they did a year ago, Juenger said. However, profits are based on film budgets and what home videos came out in the quarter as well.
WHY IT MATTERS: Time Warner's results offer a window into the health of the advertising market, and thus the strength of companies in the wider economy.
CEO Jeff Bewkes is also a big proponent of linking online and mobile access to television to a traditional pay TV plan. This attempt to keep up with changing media consumption habits also merits watching closely.
WHAT'S EXPECTED: Analysts polled by FactSet expect Time Warner to post adjusted earnings of 64 cents per share on $6.81 billion in revenue.
LAST YEAR'S QUARTER: In the first quarter a year ago, Time Warner posted adjusted earnings of 58 cents per share on revenue of $6.68 billion.
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