Time Warner reported lower net income in the first quarter despite big gains at Turner Broadcasting driven by March Madness.
Net income was $970 million compared to $1.3 billion a year ago. A big reason for the decline was the sale and leaseback of the company’s space in the Time Warner Center a year ago, which resulted in a $441 million gain a year ago. Excluding that, Time Warner said its adjusted operating income grew 12% to a record $1.8 billion, or $1.19 a share, up 23%.
Revenue rose 5% to $7.1 billion, more than Wall Street had been expecting.
The company reaffirmed its guidance that full year adjusted diluted earnings per share from continuing operations would be in the $4.60 to $4.70 range.
“We got off to a very strong start in 2015, with Revenues up 5%, and Adjusted Operating Income growing 12% to a quarterly record of $1.8 billion. This led to a 23% increase in Adjusted EPS and puts us on track to achieve our goals for the year," CEO Jeff Bewkes said in a statement. “We accomplished a lot in the quarter, led by Turner, which had its best quarter ever, with audience growth across a number of its networks.”
At Turner Broadcasting, operating income rose 23% to $1.1 billion. Revenue rose 5% to $2.7 billion. Ad revenues were up 4% because of the NCAA basketball tournament. Subscription revenues rose 3%. Content and other revenues rose 25%.
Turner’s expenses were lower for marketing and programming, and other cost were reduced by the big restructuring announced last year.
Operating income was down 1% to $458 million at HBO because of higher programming, distribution and marketing costs. The marketing costs were mostly because of the launch of the over-the-top streaming product HBO Now.
HBO’s revenues grew 4% to $1.4 billon as domestic subscription rates rose.
Warner Bros. operating income fell 12% to $234 million because of higher film and advertising costs. Revenues rose 4% to $3.2 billion partly because of the SVOD sale of Friends.