The last three months of the year appear to have been good enough for Time Warner, at least considering that profits and revenues were both down. The stock price is up a little under 1% in pre-market trading this morning after the media giant announced a 10% increase in its dividend, to an annualized $1.40 cents a share, and an adjusted earnings forecast for 2015 of as much as $4.70 a share, slightly above analyst forecasts. Time Warner generated net income of $718 million, down nearly 27% vs the period in 2013, on revenues of $7.53 billion, -1.0%. The top line was a little shy of the $7.55 billion that the Street expected. But adjusted earnings at 98 cents a share were well ahead of the consensus prediction for 93 cents.
“Our financial performance reflects the strength of our position as the world’s leading video content company,” CEO Jeff Bewkes says. After returning $6.6 billion to shareholders in stock buybacks and dividends in 2014, the company remains “committed to building on our strong record of providing direct returns to shareholders.” Today’s 10% dividend bump is “the sixth straight year we’ve raised the dividend by double-digits.”
The main Turner cable business was challenged in a quarter where many of its channels went dark on Dish Network. Revenues increased 2% to $2.6 billion while operating income dropped 8% to $788 million. Ad sales fell 1% but fees from cable and satellite companies grew 3%. The company attributes the weak ad sales to ratings declines at channels including TNT and TBS, although it saw pickups at CNN and international networks. Programming costs fell 1% in a quarter that included a $44 million writedown vs. $68 million in the period in 2013. Turner also had $26 million in charges tied to layoffs.
HBO fared a bit better on the sales side, but struggled with rising programming costs. Revenues were +6% to $1.3 billion while operating income dropped 5% to $394 million. Time Warner says that subscription revenues increased 5%, partly due to price hikes, while home video sales increased 14%. But programming outlays for original series and theatrical movies were up 15%.
Warner Bros pulled up the rear with revenues down 5% to $3.8 billion and operating income off 44% to $319 million — including a $36 million foreign currency charge and another $36 million charge for “asset impairments.” Home videos helped to weigh down the results as late 2014 releases including Edge Of Tomorrow and Tammy couldn’t compete with Man Of Steel, Pacific Rim, and The Hangover Part III in late 2013. The studio recorded $119 million in restructuring and severance charges, up from $16 million in the period in late 2013.