Time Warner says it could expand HBO Now digital video service

Time Warner's HBO Now digital video service could expand to include television shows from Turner Broadcasting and films from the Warner Bros studio, executives said on Wednesday, as the company announced it had beat first-quarter earnings expectations.

"We are very flexible about what might evolve with the content inside HBO Now," Richard Plepler, chief executive of the premium cable channel, said during a call with analysts. "Our cousins at Warner Bros and Turner could certainly be a part of that."

Time Warner's continued push into standalone streaming, which allows subscribers to watch HBO programmes and Hollywood films without a pay-television subscription, comes as rocketing demand for online video is reshaping the US TV industry.

HBO Now is available on Apple devices and to customers of New York-based Cablevision. It is in discussions with Amazon about the future of a year-old licensing deal that puts some older HBO shows on the retailer's video offering, Mr Plepler said.

Time Warner has also put Turner channels, including TNT, TBS and CNN, on new online-only channel bundles from Dish Network and Sony, that are targeted at younger viewers who have avoided expensive pay-TV subscriptions.

While more than 80 per cent of US households still pay for TV service, penetration has peaked and some companies are losing subscribers. More worrying for the industry is the growing number of younger viewers who have never subscribed to pay-TV or are choosing cheaper, limited bundles.

John Martin, Turner chief executive, said the company's internet TV deals were intended to address those concerns.

"We are hopeful that this new packaging era that we are moving into is going to reverse the subscriber trend losses that we have been experiencing recently in the US," he said.

Time Warner's "aggressive" pursuit of growth opportunities beyond its traditional TV partners, as chief executive Jeff Bewkes described it, has come as the company faces pressure to boost its stock price and growth. Since rebuffing a bid from Rupert Murdoch's 21st Century Fox last year, it has been cutting costs and restructuring.

On Wednesday, the company said it had raised the fees it charged to carry its cable networks and saw a boost in advertising revenue from the NCAA men's college basketball tournament.

Net income dipped to $97m, or $1.15 a share, from $1.3bn, or $1.42 a share, a year ago. But stripping out one-time costs and other items, adjusted earnings of $1.19 a share beat Wall Street's estimate of $1.09. Revenue rose 4.7 per cent to $7.1bn from $6.8bn, ahead of an expected $7bn.

The cost-cutting has been most pronounced at Turner, where adjusted operating income, which strips out items including currency effects, jumped 26 per cent to a record $1.1bn.

At HBO, operating income dipped 1 per cent to $458m on higher programming, distribution and marketing costs, as the company promoted the HBO Now launch.

Time Warner shares were down 0.25 per cent at $84.77 at midday in New York.

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