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Time Warner profit beats estimates as subscription fees rise

Time Warner Inc. Time Warner Center CNN
Michael Nagle | Bloomberg | Getty Images

Time Warner reported better-than-expected quarterly revenue and profit, helped by higher subscription fees for channels offered by its Turner Broadcasting and Home Box Office businesses.

Shares of the company, which also raised its adjusted profit growth forecast for 2014, rose 3 percent in premarket trading. (Get the latest quote on Time Warner here).

Revenue from Turner Broadcasting, the operator of channels such as CNN, TBS and TNT, rose 4.6 percent in the third quarter, mainly due to price increases in the United States.

The unit accounted for more than one-third of the company's total revenue.

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Revenue from its Home Box Office unit, which runs the successful crime show "True Detective," rose 10 percent and accounted for about 21 percent of Time Warner's total revenue.

The media company will launch HBO as a standalone online streaming service next year for customers who do not have cable television. This may pose a threat to media streaming company Netflix and may drive more consumers to drop their cable subscriptions.

The company, which rebuffed a takeover offer from Rupert Murdoch's Twenty-First Century Fox in August, raised its percentage growth forecast for full-year adjusted profit to high teens from low teens.

Time Warner based its forecast on 2013 adjusted earnings of $3.51 per share. Analysts on average are expecting a profit of $4.01 per share for 2014, according to Thomson Reuters I/B/E/S.

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Time Warner reported earnings of $1.22 per share, a rise from last year's earnings of $1.01 per share.

The company's revenue decreased to $6.24 billion, compared to $6.86 billion last year.

Analysts expected Time Warner to post quarterly earnings of 94 cents per share on revenue of $6.16 billion, according to estimates from Thomson Reuters.

By the end of November, Time Warner plans to lay off 10 percent of its workforce—7 percent of HBO's employees will be cut.

—CNBC's Hailey Lee contributed to this report.