Warner Bros was a stand-out unit for Time Warner in Q2 — but not for the reason you might expect. The entertainment company points to the release of videogames Batman: Arkham Knight and Mortal Kombat X as leading drivers for the studio.
Still, it took more than a few games to drive the company’s better-than-expected results. Time Warner reported net income of $971 million, up 14.2% vs the period last year, on revenues of $7.35 billion, up 8.3%. The top line handily beat the $6.90 billion that analysts expected. Earnings at $1.16 a share, and $1.25 when with adjustments, beat expectations for $1.03.
“Our results were led by Turner and Warner Bros., and were achieved at a time when we’re investing aggressively to position the company for continued growth, including the successful launch of HBO Now, our standalone domestic streaming service,” CEO Jeff Bewkes says. Warner Bros.’ games business also was the top videogame publisher for the first half of the year.”
Per usual, Turner was the biggest profit generator with $1.13 billion in operating income, up 21.6%, on revenues of $2.83 billion, up 2.8%. The company says that ad sales fell about 1% — with domestic up but overseas down, mostly due to the impact of the strong dollar. CNN and TBS had good quarters. Programming costs fell 9% without NASCAR, which it had last year. The operation also benefited from syndication sales to Hulu.
HBO’s financial story was less compelling as it shouldered additional costs to launch HBO Now. Its operating income fell 7.3% to $508 million with revenues up 1.5% to $1.44 billion. Increases in subscription rates were offset by declines in content sales, and the transfer to Turner of a basic cable channel in India.
Warner Bros was a mixed bag, although the numbers turned out well with the push from video games. Operating income increased 45.7% to $341 million with revenues up 14.9% to $3.30 billion. Theatrical revenues fell, which the company attributes lower home video and worldwide TV licensing sales. But TV licensing was up with second cycle syndication The Big Bang Theory and syndication of Seinfeld to Hulu.
In addition to the financial report, Time Warner declared its regular 35 cents a share quarterly dividend. It also reaffirmed its projection to generate as much as $4.70 a share in adjusted earnings per share this year.