Time Warner Reports Higher 3Q Earnings

Revenue up 5%, led by HBO and Warner Bros.
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Time Warner reported higher third-quarter profits as revenue rose at HBO.

Net income rose 39% to $1.35 billion, or $1.26 a share, from $967 million, or $1.11 a share. A year ago, the company had significant restructuring costs, which made this quarter look stronger.

Revenues rose 5% to $6.6 billion.

The financial results exceeded Wall Street expectations.

The company also reaffirmed its guidance that adjusted earnings per share would be in the $4.60 to $4.70 range for the year.

“We had another very good quarter,” said CEO Jeff Bewkes. "Our revenue growth was led by Warner Bros. and Home Box Office, and illustrated how our investments in great content have been paying off in our traditional television businesses, as well as in newer areas such as videogames.”

Bewkes said that Warner Bros. had two of the most watched new shows on television with Blindspot and Supergirl—both based on intellectual property from D.C. Entertainment.

He also noted the strong ratings for Turner’s coverage of the baseball playoffs and that Cartoon Network continued to gain share. “And CNN continued to grow its primetime ratings across all key demographics in the quarter,” he said.

Adjusted operating income at Turner rose 206% to $1.1 billion because of lower expenses. Expenses were down because programming costs no longer include NASCAR and the company had restructuring and severance costs a year ago. A year ago the company also took a charge of $482 million because of a decision to stop airing certain programming.

Turner revenues were down 2% to $2.4 billion. Advertising revenues were down 1% partly because of the impact of foreign exchange rates. Domestic advertising was flat because of the absence of NASCAR. Subscription revenues were down 1% because of currency changes and a decrease in domestic subscribers.

HBO’s operating income was up 37%. Expenses were lower than last year, when there were costs for restructuring and severance. Programming expenses were down 6% because of lower costs for acquisition theatrical programming. Marketing and technology costs were up to support HBO Now. HBO revenues were up 5% to $1.4 billion, with subscription revenues up 4%.

Warner Bros. adjusted operating income rose 61% to $388 million versus a year ago when there were restructuring costs. Revenues were up 15% to $3.2 billion because of higher videogame and television licensing sales.

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