(Adds CEO remarks from conference call, analyst quote, Comcastdetails)
By Liana B. Baker
Nov 6 (Reuters) - Time Warner Inc's third-quarter profitbeat estimates, driven by growth at its cable networks, and itschief executive said on Wednesday a new cable package offered byNo. 1 cable operator Comcast would help HBO expand itssubscriber base.
Comcast Corp said in October it would offer apromotion that included HBO, the premium cable channel, and itsHBO Go online service in a pared-down basic cable package ofabout 10 channels as well as Internet access for about $50 amonth.
The move was closely watched by investors and analysts, whosee it as a test for HBO to be sold in a different format, andas a sign that one day customers will be able to buy smallerpackages of channels.
Speaking on a conference call with analysts, Time Warner CEO Jeff Bewkes said the package "could be an effectiveway" for HBO to reach the 8 million or 10 million homes thatcurrently have Internet subscriptions, but no video service. HBOis still figuring out how to get a bigger slice of the 60million to 70 million U.S. customers who pay for a televisionsubscriptions but don't have HBO.
Finance chief John Martin said the company is seeing "someencouraging subscriber trends at HBO" that will drive subscriberrevenue to accelerate next year.
Bewkes insisted that if the small cable bundles becomepopular, Time Warner Cable's basic channels such as TNT and TBSwould still be included in the packages.
"If there's viability and consumer attractiveness for peopletrying to get basically a more focused, more valuable and lessexpensive basic cable package, our channels will be in there,"Bewkes said.
TIME INC SPINOFF DATE
Bewkes updated the timing for the spinoff of Time Inc,saying that Time Warner Inc's publishing assets will become anindependent company in the second quarter of 2014. The companyannounced the spinoff earlier this year.
On Oct. 31, longtime news executive Norman Pearlstine saidhe was leaving Bloomberg LP to return to Time Inc in the newlycreated job of executive vice president and chief contentofficer, reporting to CEO Joe Ripp.
Revenue at the publishing unit fell 2 percent to $818million in the third quarter, the company said.
Revenue at its cable business, including Turner Broadcastingchannels such as CNN as well as HBO, increased 5 percent to $3.5billion. Advertising was up 11 percent to $96 million.
"A strong advertising demand environment has helped," saidBernstein Research analyst Todd Juenger. "But the main story forthe stock has been, and continues to be, anticipatedacceleration of subscription fees."
Time Warner has forecast significant percentage gains insubscription fees when it renews contracts with pay TV operatorsthrough 2014 and 2015.
Revenues fell 7 percent to $2.7 billion at its Film and TVEntertainment unit that includes Warner Brothers. It blamed thedecline partly on a tough comparison to a year ago, when itbenefited from the strong box office from the Batman movie "TheDark Knight Rises."
Net income for Time Warner was $1.18 billion, or $1.26 centsper share, up from $822 million, or 84 cents a share, a yearago.
Adjusting for discontinued operations and other items,earnings per share were $1.01, which beat Wall Street estimatesby 12 cents.
Revenue rose 0.2 percent to $6.86 billion. Analystsexpected $6.94 billion, according to Thomson Reuters I/B/E/S.
Time Warner shares fell 17 cents, or 0.2 percent to $68.06. (Reporting by Liana B. Baker; Editing by Jeffrey Benkoe)
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