Time Warner Beats Forecasts to Break Even in First Quarter

Time Warner Inc., the world’s No. 1 media company, had better-than-expected operating results in the first quarter, breaking even on strong growth at its cable-television networks and Warner Bros. film studio.

The company broke even on a per-share basis, beating the average analyst estimate of a 4-cent loss, according to First Call Corp. Net income, including a gain, was $138 million, or 10 cents a share, before the payment of preferred dividends. It had a loss of $62 million, or 12 cents, in the year-earlier period.

Time Warner’s cable networks led the growth as Home Box Office, TBS and TNT sold more advertising and added subscribers. The Warner Bros. studio, which struggled last year with several money-losing films, benefited from strong ticket sales for “Analyze This” and “You’ve Got Mail.” The music division has gained market share with top-selling artists such as Cher, Madonna and others.

Revenue for New York-based Time Warner and its partnership with MediaOne Group Inc. rose 2.4% to $6.20 billion from $6.05 billion.

Operating cash flow, which Time Warner defines as earnings before interest, taxes and amortization, rose 47% to $1.25 billion from $852 million. Analysts and investors use cash flow to analyze the performance of indebted companies such as Time Warner because it focuses on how the underlying businesses are doing.

Time Warner ended the quarter with about $16.9 billion of debt, largely from the almost $14 billion the company took on when it was formed in 1989 by Time Inc.’s purchase of Warner Communications.

Time Warner shares tumbled $3.50 to close at $73.50 on the New York Stock Exchange.

This is the 10th quarter in a row that Time Warner has met or exceeded forecasts.