Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Why You Should Buy Time Warner Inc. (TWX)

Page 1 of 2

Media giant Time Warner Inc. (NYSE:TWX) posted quarterly earnings of $1.21 per share, or $1.17 billion, an increase from the 76 cents per share, or $773 million, it reported in the prior year quarter. After adjusting for one-time benefits and charges, the company earned $1.17 per share, surpassing the FactSet analyst average forecast by 7 cents. However, revenue slid from $8.19 billion to $8.16 billion, missing the $8.22 billion analysts had forecast.

Its subsidiary HBO also reported strong overseas subscribers, despite unfavorable currency impacts. The popularity of its shows has led to a 7% increase in revenue from distributor and subscription fees, while ad revenue grew 3%.

Time Warner Inc (NYSE:TWX)Despite the movie studio and magazine businesses of the company showing signs of weakness, the overall earnings growth is expected to be robust going forward. The stock has been in a major uptrend for the past nine months. I feel this uptrend will continue and investors will be rewarded handsomely in the long run.

Time Warner’s Risk / Reward Ratio to Improve

The company’s risk / reward profile is favorable for long-term investors, and going forward it’s expected to improve even further based on the following factors:

1). A solid and improving position for subscription fee growth in the next carriage cycle at Turner and over the longer term at HBO

2). Long-term visibility of the company’s networks programming expense — highlighted most recently by HBO’s renewal of film output deals with Fox and Universal

3). Management’s focus on capital return than big-ticket M&A, as befits a company with leading scale in all its business lines

Positive Catalysts for the Company

1). Popular shows such as the new “Dallas” boosted ratings at its Turner cable channels (TBS, TNT, and CNN)

2). “Girls” and “Game of Thrones” attracted more subscribers at its subsidiary HBO

3). Royalties from online streaming video services will help older shows generate additional revenue and these gains are expected to offset weakness in its movie studio and magazine businesses

Movie Studio and Magazine Segments Fared Poorly

Time Warner’s movie studio, Warner Bros., had weaker film releases last quarter, which couldn’t match the earning power of the “Harry Potter” series, which concluded in 2011. Although “Argo” and “The Hobbit” generated strong box office returns, they couldn’t measure up to the previous success of the “Harry Potter” franchise.

But there’s no reason to be overly pessimistic regarding the long-term prospects of the movie studio business, due to its fluctuating nature. With a strong cash position the studio business will certainly stage a turnaround in the coming quarters. Competitors like The Walt Disney Company (NYSE:DIS) and Viacom, Inc. (NASDAQ:VIAB) also witnessed similar trends, but this hasn’t created any serious pressure on these media stocks over the last twelve months. In fact, all of them are up significantly since January, last year.

People and Time were among the company’s titles with the biggest drops at the newsstand, based on an analysis of data released recently by the Alliance for Audited Media. Subscription sales rose 3%, helping boost total circulation 1% to 32.9 million. But this is a general trend thanks to the growing demand for digital magazines, better known as ezines. A few bright spots include a 5.1% rise in total circulation at Essence and an 8.5% jump for People StyleWatch magazine. Nearest competitor News Corp (NASDAQ:NWSA) is planning to spin-off its publishing business and the stock is up 45% over the last twelve months on the news.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!