Turner, HBO Businesses Help Time Warner’s Q4

February 11, 2015 World Screen Top Stories

NEW YORK: Despite increases at HBO and Turner, Time Warner reported a slight decline in revenues for its fourth quarter to $7.5 billion, with a weak performance at Warner Bros.

Q4 adjusted operating income decreased 10 percent to $1.6 billion, primarily due to restructuring and severance charges across all segments and charges at Turner related to its decision to no longer air certain programming. Operating income decreased 20 percent to $1.4 billion. Full-year revenues increased 3 percent from 2013 to $27.4 billion, with growth across all divisions. Adjusted operating income declined 6 percent from the prior year to $5.8 billion, primarily due to charges at Turner related to its decision to no longer air certain programming and restructuring and severance charges across all segments. Operating income decreased 5 percent to $6 billion.

At Turner, fourth-quarter revenues increased 2 percent to $2.6 billion, due to increases of 5 percent in subscription revenues and 3 percent in content and other revenues, offset in part by a decline of 1 percent in advertising revenues. Revenues for the full year increased 4 percent to $10.4 billion, benefiting from an increase of 7 percent in subscription revenues, 1 percent in advertising revenues and 2 percent in content and other revenues. Full-year adjusted operating income decreased 12 percent to $3.1 billion as higher revenues were more than offset by higher expenses, including increased programming costs and higher restructuring and severance expenses.

HBO reported an increase of 6 percent in Q4 revenues to $1.3 billion, due to subscription revenue growth of 5 percent and an increase of 14 percent in content and other revenues. Revenues for the full-year 2014 increased 10 percent to $5.4 billion, due to subscription revenue growth of 8 percent and an increase of 24 percent in content and other revenues. Content and other revenues rose primarily due to the licensing of select original programming to a subscription video-on-demand service and higher home video revenues, which benefited from sales of Game of Thrones: The Complete Third Season. Full-year adjusted operating income grew 7 percent to $1.8 billion, reflecting higher revenues, partly offset by increased expenses primarily due to higher programming and distribution costs as well as the comparison against the prior-year results.

Over at Warner Bros., Q4 revenues decreased 5 percent to $3.8 billion, mainly due to lower home entertainment and video game revenues. The current year period included the home entertainment releases of Edge of Tomorrow and Tammy, while the prior-year period included the home entertainment releases of Man of Steel, Pacific Rim and The Hangover Part III and the video game release of Batman: Arkham Origins. For the full-year 2014, revenues were up 2 percent to $12.5 billion, due to stronger TV revenues, primarily due to growth in initial telecast fees, including from the acquisition of Eyeworks Group’s operations outside the U.S., and higher international television licensing revenues due to growth in both subscription video-on-demand and linear television revenues. Adjusted operating income for the full year decreased 6 percent to $1.2 billion, as higher revenues were more than offset by higher television production costs and increased restructuring and severance costs.

Jeff Bewkes, Time Warner's chairman and CEO, said: “We had another very successful year in 2014, with solid revenue growth and robust 18 percent Adjusted EPS growth—our sixth consecutive year of at least high teens adjusted EPS growth. Our financial performance reflects the strength of our position as the world’s leading video content company. For the year, three of Turner’s networks—TBS, TNT and Adult Swim—ranked among ad-supported cable’s top 10 networks in prime time among adults 18 to 49. TNT was home to 6 of the top 15 original series on ad-supported cable in 2014, more than any other network, including the three most watched new series, The Last Ship, The Librarians and Murder in the First. CNN strengthened its programming and in 2014 had an average total day monthly reach of almost 77 million total viewers, the highest of any cable news network. HBO also had another outstanding year, airing its most-watched original series ever—Game of Thrones—and its most-watched freshman series, True Detective. HBO’s strong performance was reflected in its 19 Primetime Emmy Awards—the most of any network for the 13th consecutive year—and in its highest growth in domestic subscribers in over three decades. Together Warner Bros. and HBO received 13 Academy Award nominations, including best picture for American Sniper, which set box-office records last month. In television production, Warner Bros. is airing more than 60 series for the 2014-2015 television season, including the most prime-time series on broadcast networks of any studio for the 11th time in the past 12 seasons. Warner Bros. also successfully mined its rich DC library with Gotham and The Flash emerging as two of the season’s bona fide freshman hits.”

Bewkes added: “Last year we also returned $6.6 billion to shareholders through share repurchases and dividends. We’re committed to building on our strong record of providing direct returns to shareholders, evidenced by the 10 percent increase in our dividend approved by our board, which is the sixth straight year we’ve raised the dividend by double-digits.”