Time Warner Q2 Financials See Nice Lift from Wonder Woman

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Time Warner saw its second-quarter revenues rise 5 percent to $7.3 billion, with increases across all operating divisions and a particularly strong bump from the box-office release of Wonder Woman.

Operating income decreased 8 percent to $1.7 billion due to declines at Warner Bros. and Turner and higher corporate expenses, partially offset by an increase at HBO. Adjusted operating income was essentially flat at $1.8 billion, with growth at HBO and Warner Bros. offset primarily by a decline at Turner.

Turner posted a 3 percent lift in revenues to $3.1 billion, seeing increases of 13 percent in subscription revenues, partially offset by declines of 6 percent in advertising revenues and 8 percent in content and other revenues. Subscription revenues benefited from higher domestic rates and growth at Turner’s international networks, partially offset by lower domestic subscribers. Operating income decreased 7 percent to $1.1 billion. The growth in revenues was more than offset by higher expenses, mainly due to increased programming costs.

At HBO, revenues were up 1 percent to $1.5 billion, as an increase of 8 percent in subscription revenues was partially offset by a decline of 44 percent in content and other revenues—mainly due to lower home entertainment and international licensing revenues. Operating income increased 10 percent to $531 million, with growth in revenues and lower expenses, including declines in restructuring and severance, programming and distribution costs.

Revenues at Warner Bros. increased 12 percent to $3 billion, due to higher theatrical and video games revenues being partially offset by lower TV revenues. The increase in theatrical revenues was mainly due to the box office release of Wonder Woman. Television revenues declined primarily due to lower initial telecast revenues. Operating income was down by 28 percent to $223 million, as the growth in revenues was partially offset by higher associated film costs and print and advertising expenses from the mix and number of film and games releases. The quarter also faced a tough comparison, as operating income in last year’s Q2 included a gain on the sale of Flixster.

Jeff Bewkes, Time Warner’s chairman and CEO, said: “We’re very pleased with our first-half results, which keep us on track to achieve our objectives for the year. Our performance is a result of the continued successful execution of our strategic objectives—with the strong subscription revenue growth at Home Box Office and Turner a great example of this—along with the investments we’re making in our brands and high-quality video content. Warner Bros. is home to the biggest cinematic hit of the summer so far with Wonder Woman, which has grossed approximately $800 million at the global box office to date, and dazzled audiences again last month with the critically acclaimed Dunkirk. Heading into the 2017-18 television season, Warner Bros. is the leading supplier of prime-time series to the broadcast networks for the ninth straight season. In ad-supported cable, Turner was once again home to three of the top five networks among adults 18 to 49 in prime time, with TNT and TBS leading the way in the number one and number two spots. CNN also continued to distinguish itself, posting its most-watched second quarter ever. And last month, Game of Thrones returned to HBO, with the most-watched season premiere episode ever on HBO.”

Bewkes continued: “The creative excellence across the company was also on display as Time Warner garnered more than 150 Primetime Emmy nominations. HBO once again received more nominations than any other network, and HBO’s Westworld, which is produced by Warner Bros., received the most nominations of any show. These results and accolades reflect strong execution and the investments we’ve been making, both in the best content and in ensuring that we deliver our content across platforms to offer engaging experiences for our audiences. Accelerating our pace of innovation and being able to connect more directly with consumers are among the exciting reasons for our proposed merger with AT&T, which remains on track to close before year-end, pending regulatory review and consents.”