It’s goodbye, Time magazine, hello, Rupert Murdoch?

Having shed the ink-stained remnants of its publishing business, a leaner Time Warner Inc. (NYSE:TWX) is expected to report flat profits on lower revenue Wednesday morning as gains at HBO offset a disappointing summer for Warner Bros. Studios and a challenging quarter for Turner Broadcasting’s suite of cable networks.

The New York-based media company is expected to show net income of $753.25 million, or 84 cents per share, compared with $793 million, or 83 cents a share, for the same period last year. Analysts polled by Thomson Reuters expect revenue to fall 7.6 percent to $6.87 billion, down from $7.44 billion for the three-month period that ended June 30.

Direct year-over-year comparisons are difficult as Time Warner completed its spinoff of Time Inc. (NYSE:TIME) on June 6, when shares of the new company were distributed to Time Warner shareholders. The move was expected to allow Time Warner to focus on its more profitable media and entertainment divisions, without the underperforming print business weighing it down.   

Time Warner will report financial results on Wednesday, with a conference call scheduled for 10:30 a.m. EDT. During the Q&A session of that call, CEO Jeff Bewkes can expect to be grilled extensively about the possibility of a merger with Rupert Murdoch’s 21st Century Fox Inc. (NASDAQ:FOXA), which made an $80 billion takeover bid in June. The bid was rejected, but news of the offer -- which valued Time Warner about 20 percent higher than shares had been trading -- sent the company’s stock soaring. Despite the initial rebuff, it is widely believed that Murdoch will return to the table with an even higher bid.   

Word on the street is that Murdoch wants to get his hands on HBO, and with good reason. The network, with a growing subscriber base and expansive portfolio of premium content, is apt foil for Netflix Inc. (NASDAQ:NFLX) in the burgeoning TV-streaming wars. During the second-quarter 2014, HBO was Time Warner’s best-performing division, with revenue expected to rise 15.5 percent to 1.41 billion, thanks to a video-on-demand deal inked in April with Inc. (NASDAQ:AMZN). No wonder Murdoch is salivating.  

Marci Ryvicker, a senior analyst with Wells Fargo Securities, said in a research note last week that she believes a Fox-Time Warner merger will eventually happen, but she cautioned that key questions remain. Time Warner’s CNN -- a direct competitor of Murdoch’s Fox News -- would likely have to be sold off to satisfy antitrust regulators, and some analysts have speculated that CBS Corporation (NYSE:CBS) may not be as serious about acquiring CNN as reports suggest. “[S]ome investors suggest it would be bad for the stock,” Ryvicker wrote.

CNN is part of Turner Broadcasting, whose stable of cable networks -- including TNT, TBS, Cartoon Network and others -- make up about 37 percent of Time Warner’s revenue. In terms of ratings, the division is coming out of a challenging quarter, with viewership down about 10 percent throughout Time Warner’s cable networks. CNN, for instance, continues to struggle despite numerous tweaks to its daytime and primetime lineups. Ryvicker expects Turner revenue to rise 4 percent to $2.73 billion, with subscription revenue up 7 percent, advertising up 1 percent and content revenue up 5 percent.

Finally, it was a mostly disappointing summer for the Warner Bros. movie studio, whose box-office releases underperformed compared to the same period last year. The Adam Sandler-Drew Barrymore comedy “Blended” was a misfire, barely earning back its $40 million production budget in domestic ticket sales, according to Box Office Mojo. The Tom Cruise actioner “Edge of Tomorrow” also fell short. The studio’s biggest summer hit was “Godzilla,” which earned $199 million domestically, but still fell short of last year’s “Man of Steel.” Warner Bros. revenue is expected to rise 3.8 percent to $2.83 billion.

Analysts are generally optimistic about Time Warner’s prospects going into next year. “[W]e see relatively healthy gains in advertising and affiliate revenues for the Turner networks (led by TNT and TBS), and further HBO gains on subscriber growth,” Tuna Amobi, an equity analyst for S&P Capital IQ, wrote in a July stock report. Out of 28 analysts following the company, 13 rated the stock "buy."

Let the grilling begin.

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