NEW YORK (AP) -- Time Warner Inc., the owner of Warner Bros., HBO, CNN and DC Comics, said Wednesday that its first-quarter earnings fell 10 percent because of a lack of hit movies in the period, but results beat Wall Street expectations as advertising revenue grew.
The New York-based media conglomerate said its net income fell to $653 million, or 59 cents per share, for the three months ended March 31. That's down from $725 million, or 62 cents per share, a year earlier.
Excluding one-time items, earnings were 58 cents per share, beating the average analyst estimate of 57 cents, as surveyed by FactSet.
Time Warner's revenue rose 6 percent to $6.7 billion, beating analyst forecasts of $6.5 billion.
Revenue growth came entirely from Time Warner's cable networks segment, where advertising grew 31 percent and subscription revenue grew 9 percent because of higher monthly fees. Revenue from the resale of programming grew 48 percent, mostly from HBO shows such as "The Pacific" and "Boardwalk Empire." However, operating income from the cable networks grew just 2 percent, after adjusting for special items, as expenses kept pace with revenue growth.
At the Warner Bros. movie studio, revenue fell 3 percent and operating income was halved compared with last year's first quarter, when "Sherlock Holmes" and "The Blind Side" played in theaters and there were more DVD releases.
Revenue at the publishing division was flat at $798 million, but income rose with advertising in higher-margin magazines, and the company reduced expenses.
Time Warner kept its forecast for the full year, which calls for earnings excluding items to rise by a "low teens" percentage from last year.
Time Warner shares fell $1, or 2.7 percent, to $36.73 in midday trading.
Like other media companies, Time Warner is navigating the transition of media consumption from paper and TV screens to computer and phone screens. On Wednesday, it said Warner Bros. will buy Flixster, a social network for movie fans and the movie-review site Rotten Tomatoes.
"We'll use the Flixster brand and platform to launch several initiatives that aim to dramatically improve the consumer proposition of owning digital movies," CEO Jeff Bewkes said. Users will be able to buy, rent and organize movies through Flixster, and the goal is to get other studios on board as well, he told analysts on a conference call.
HBO, Time Warner's cash cow, is dependent on revenue from cable and satellite companies, and could be susceptible if households start giving up traditional pay-TV in favor of Internet video. Bewkes said that concern is overblown, but he didn't rule out the possibility of selling HBO directly to viewers, bypassing cable companies.
"HBO does have the ability to do that ... if it's a wise thing to do, we'll do it," Bewkes said.
HBO already has a "Go" service, which allows cable and satellite subscribers to view shows on their computers. This week, Time Warner expanded the service to Apple's iPads, iPhones and iPod touches. The service isn't available to Time Warner Cable Inc. and Cablevision Systems Corp., subscribers, but Bewkes said he hopes they'll come on board. Both companies have their own apps for Apple devices that allow the viewing of TV content, but not HBO.
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