The big question at Time Warner is still whether it will have to lower its ambitious long-term financial goals. But this morning’s Q3 performance numbers might impress those who don’t want to wait for an answer.
The media giant reported $1.04 billion in net income, up 7% vs the period last year, on revenues of $6.56 billion, up 5.1%. The sales number beat analysts’ consensus forecast for $6.51 billion. And adjusted earnings at $1.25 a share handily beat expectations for $1.09.
“Our revenue growth was led by Warner Bros. and Home Box Office, and illustrated how our investments in great content have been paying off in our traditional television businesses, as well as in newer areas such as videogames,” CEO Jeff Bewkes says. He adds that the company demonstrated its “continuing commitment to shareholder returns” by returning $4.2 billion in share repurchases and dividends so far this year.
Warner Bros revenues were up 15% to $3.2 billion, with operating income up 62% to $148 million. Video games including LEGO Dimensions and Mad Max were big contributors. TV licensing was helped by initial cable and off-network sales of 2 Broke Girls and sales of Person Of Interest to cable and streaming distributors.
HBO’s revenues improved 5% to $1.4 billion, with operating income up 37% to $519 million. The company attributes the gains to rising domestic subscription rates, as well as higher domestic licensing sales. The profit line looks good in comparison to last year which included restructuring and severance costs. Time Warner says programming costs were down 6% with lower spending on theatrical movies, although marketing and technology expenses were up for HBO Now.
Turner Broadcasting was mixed with revenues down 2% to $2.4 billion but operating income up 218% to $1.1 billion. Subscription and ad revenues each fell 1%, while content sales were down 15%.Time Warner says the drop in subscription revenue was partly due to a decline in domestic subscribers, partly offset by higher rates. Programming costs were down 45% compared to last year which included writedowns from the company’s decision to stop airing shows including The Mentalist and House Of Payne.