Fantastic Beasts, HBO Boost Time Warner’s Q4 Earnings

NEW YORK: Revenues grew by 11 percent at Time Warner in the fourth quarter to $7.9 billion, while adjusted operating profits rose 25 percent to $1.8 billion.

Net income was down for the quarter ended December 31, dropping from $857 million in the comparable period to $293 million in Q4 2016. Time Warner attributed the decline to $1 billion in costs incurred in connection with debt repurchases.

Turner’s quarterly revenues increased 7 percent to $2.8 billion, with an increase of 14 percent in subscription revenues and 9 percent in content and other revenues, partially offset by a decrease of 2 percent in ad revenues. Operating income grew 8 percent to $841 million, as revenue growth was partially offset by higher expenses, including increased marketing costs from new original series. Adjusted operating income was up 9 percent to $851 million.

HBO—powered by the strength of Westworld, which is now the most-watched freshman series in the network’s history—saw revenue increases of 6 percent for the quarter, reaching $1.5 billion. There was a 5-percent gain in subscription revenues and a 7-percent hike in content and other. Operating income increased 9 percent to $429 million, with the increase in revenues partially offset by higher expenses, including increased distribution expenses related to the timing of home video releases. Programming expenses were down 2 percent, despite increased original programming costs. Adjusted operating income increased 10 percent to $431 million.

Warner Bros. delivered revenues of $3.9 billion, a 17-percent lift over the prior-year Q4, thanks to the theatrical revenues from Fantastic Beasts and Where to Find Them and The Accountant. Operating income was up 57 percent to $574 million, primarily due to the increase in revenues, partially offset by higher associated costs of revenues. Adjusted operating income increased 57 percent to $586 million.

For the full-year 2016, revenues at Time Warner were up 4 percent to $29.3 billion. Net income attributable to shareholders was $3.9 billion, a slight dip from the $3.8 billion recorded for 2015.

Jeff Bewkes, Time Warner’s chairman and CEO, said: “We had another very successful year in 2016, demonstrating once more Time Warner’s ability to deliver strong financial performance alongside creative and programming excellence. All our operating divisions increased revenue and profits while also making investments to capitalize on the growing demand for the very best video content and new ways to deliver it to audiences around the world. Warner Bros. is once again the number one supplier of television shows for the broadcast networks, and had its second-best year ever at the global box office, nearing $5 billion in receipts with such hits as Batman v. Superman: Dawn of Justice, Suicide Squad and Fantastic Beasts and Where to Find Them.”

Bewkes continued: “Home Box Office again stood apart with its combination of the biggest Hollywood hit movies and best original programming—receiving more Primetime Emmy Awards in 2016 than any other network for the 15th consecutive year and launching Westworld, which is produced by Warner Bros. and is the most-watched new series in HBO’s history. We’re also really pleased with the growth of HBO’s domestic OTT product, and we expanded HBO’s international OTT footprint with launches in Spain, Brazil and Argentina in 2016. Turner continued to strengthen its leadership with TBS, TNT and Adult Swim all ranking among ad-supported cable’s top five networks in prime time among adults 18 to 49 for the year. TBS was the number one ad-supported entertainment cable network on the strength of great sports and a bold new lineup of originals, including Full Frontal with Samantha Bee, and CNN was the number one news network among adults 18 to 49 in prime time and the number one digital news destination in 2016. The deal to be acquired by AT&T Inc., which we announced in October 2016, will accelerate our efforts to spur innovation in the media industry and further strengthen our businesses. We remain on track to close the transaction later this year.”