Wunderlich Analyst: 'Time Warner Is A Bit Of A Transitional Story'

Media giant Time Warner Inc (NYSE: TWX) came out with mixed fourth-quarter earnings Wednesday.

Although the company beat analysts' EPS forecast of $0.94 per share by posting an EPS of $0.98, it posted revenues of $7.53, slightly short of analysts’ expectations of $7.54 billion. Time Warner also raised its quarterly dividend by $0.10 to $0.35.

Matthew Harrigan, analyst at Wunderlich Securities, was on CNBC to discuss the company's results.

How Do Time Warner's Numbers Stack Up?

“I think the ad sales contraction was almost exactly spot on for what we modeled it on. Honestly, pretty much in line with consensus,” Harrigan said. “Yeah, I think there are some ratings issues, I also think that broadly across all of television there are some measurement issues relative to Nielsen in terms of how people consume video from the Time Warner content engine and other media companies. So, I really think Time Warner is a bit of a transitional story this year.”

He continued,“I think when you get out to 2016, you’ll see a further ramp in affiliate fees and they also have a very strong Warner Brothers pipeline of DC Comic characters and such and, clearly, they just had a nice success of 'American Sniper' as well.

“So, I think this quarter was not really a pivot point, but still the strategy is working. They are doing very good job in the cost side as well.”

Related Link: UPDATE: Time Warner Posts Upbeat Q4 Earnings, Lifts Dividend

Any Questions That HBO Remains The Crown Jewel?

“I think HBO is a business that the Street has always undervalued, and even Warner is, because the quarter tends to be so lumpy and we have just seen people underestimate just how strong the long-term earnings power is [...] We love HBO,” Harrigan said.