Time Warner is the first major media company reporting Q1 results, and Wall Street should like the signals it just sent: The company reported net income of $970 million, down 24.9% vs the period last year, but on revenues of $7.1 billion, +4.8%. The top line beat analyst projections for $7.0 billion. And adjusted earnings at $1.19 per share, were well ahead of the $1.09 that the Street expected.
Time Warner shares are up 1.9% in pre-market trading.
“We got off to a very strong start in 2015,” CEO Jeff Bewkes says. The Turner cable channels had their “best quarter ever” measured by audience growth, with the NCAA Men’s Basketball Tournament “a huge multiplatform success.” Warner Bros’ American Sniper generated $500 million in global ticket sales. And HBO Now — the streaming service launched in Q2 — is “off to a great start.”
Turner was the star in Q1 with operating income +23.1% to $1.1 billion on revenues of $2.7 billion, +4.5%. Ad sales — which investors are closely watching — increased 4%. At the same time, payments from cable and satellite companies increased 3% and content sales were up 25% benefiting from sales to subscription streaming services.
The overseas gains were offset by weakening currencies vs the dollar. Turner also took a $17 million charge reflecting “remeasurement of Turner’s net monetary assets” in Venezuela. Last year’s results included $13 million from the sale of “a digital news asset.”
HBO also did well, with a modest 1.3% drop in operating income to $458 million but a 4.4% increase in revenues to $1.4 billion. The top line improvement reflects a rise in its domestic rates as well as increases in home entertainment and international licensing sales. But profits were hurt by a 9% increase in programming costs, which the company attributes to its original series, as well as marketing costs for HBO Now.
Warner Bros’ results were more mixed, as operating income dropped 12.2% to $324 million on revenues of $3.2 billion, +4.3%. The company credits some of the sales upturn to American Sniper, which has grossed more than $540 million worldwide through April 27. The unit also was lifted by video game sales — and especially its deal to license all 10 seasons of Friends to Netflix.
Profits were weighed down, though, by rising film and advertising costs as well as the impact of foreign currency exchange rates.
With the robust Q1 results, Time Warner reaffirmed its outlook for 2015 projecting full year adjusted earnings per share of as much as $4.70.