Time Warner shares slide despite earnings beat


Time Warner reported a higher-than-expected quarterly profit and boosted its stock buyback program, but the news failed to prevent its shares from tumbling more than 10 percent a day after Rupert Murdoch withdrew his bid for the company.

Revenue from Time Warner's Home Box Office unit jumped 17 percent to $1.42 billion for the second quarter, helped by the popularity of "Game of Thrones'' and other HBO shows.

Adam Jeffery | CNBC

The company said the fourth season of "Game of Thrones,'' which ended in June, was the most watched season of an original series in HBO's history. The Emmy award-winning fantasy epic had an average gross audience of 19 million viewers.

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Time Warner's board said it increased its share buyback program in June by an additional $5 billion on top of the $4 billion it allocated for the same purpose. Fox announced a buyback program Tuesday of $6 billion.

Still, Time Warner shares slumped more than 10 percent, following news Tuesday that Rupert Murdoch's Twenty-First Century Fox had abandoned its $80 billion bid for the company. (Click here to track the company's stock.)

The pulled offer means that Time Warner will have to defend its position as a solo company and convince shareholders its stock won't suffer as a result.

"When faced with a hostile takeover bid, Time Warner did exactly what they should have done. They crushed the numbers,'' wrote Michael Nathanson with MoffettNathanson Research in a note to investors.

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The company's Turner Networks unit—home to CNN, TBS and TNT—also posted an increase in revenue on higher subscription and advertisement sales.

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Net income from continuing operations attributable to Time Warner common shareholders rose to $843 million, or 94 cents per share, for the three months ended June 30, from $698 million, or 73 cents per share, a year earlier.

On an adjusted basis, the company earned 98 cents per share.

Revenue increased to $6.79 billion from $6.61 billion.

Analysts, on average, had expected a profit of 84 cents a share on revenue of $6.87 billion, according to Thomson Reuters.

The company, which also owns the Warner Bros. movie studio, forecast full-year 2014 adjusted profit growth in the low teens in terms of percentage, off a base of 2013 adjusted earnings of $3.51 per share.

Time Warner said in April it expected its full-year adjusted profit to grow in the low- to mid-teen percentage range, or better, for at least the next three or four years.

The company had spun off its magazine company Time this quarter.

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— By Reuters. CNBC contributed to this report