BENGALURU: Time Warner Inc., (Time Warner) reported 9.2 percent year-over-year (y-o-y) growth in revenue for the third quarter ended 30 September 2016 (Q3-16, current quarter).
Time Warner reported total revenue of $7,167 million for the current quarter versus $6,564 million in the corresponding year ago quarter. Among its three divisions – Turner, Home Box Office, and Warner Bros, Turner reported 8.8 percent y-o-y increase in revenue of $2,610 million in Q3-16 vis-à-vis $2,398 million in Q3-15. HBO revenue grew 4.3 percent y-o-y in the current quarter to $1,426 million from$1,367 million, while Warner Bros revenue increased 6.6 percent y-o-y to $3,402 million from $3,190 million.
Operating Income increased 9.8 percent y-o-y to $2,014 million in Q3-16 from $1,834 million. Adjusted Operating Income increased 12.4 to $2,070 million from $1,842 million, which the company says was due to increases at all operating divisions and lower intercompany eliminations. Revenues included the unfavourable impact of foreign exchange rates of approximately $55 million in the quarter.
Breakup of numbers
A 12.4 percent y-o-y) increase in subscription revenue helped boost Turner revenue, while Advertising (ad) revenue increased 1.2 percent y-o-y during the current quarter. Time Warner’s Subscription revenue in Q3-16 was $1,480 million as against $1,317 million in the corresponding year ago quarter. The division’s ad revenue in the current quarter was $996 million, while it was $980 million in Q3-15.
Turner’s operating income increased 8.4 percent y-o-y in Q3-16 to $1,612 million from $1,072 million in Q3-15.
Time Warner says that Subscription revenues increased due to higher domestic rates and growth at Turner’s international networks, partially offset by the impact of lower domestic subscribers and foreign exchange rates. Advertising revenues benefited from growth at Turner’s domestic news business, partially offset by lower delivery at certain domestic entertainment networks. International advertising was essentially flat with local currency growth offset by the impact of foreign exchange rates. Content and other revenues increased due to higher international licensing revenues.
HBO revenues increased on account of a 5.2 percent y-o-y increase in subscription revenue in Q3-16 to $1,262 million from $1,200 million. Content and other revenue declined 1.8 percent y-o-y in the current quarter to $164 million from $167 million.
HBO’s operating income in Q3-16 increased 2.1 percent y-o-y to $530 million from $519 million.
The company says that Subscription revenues increased due to higher domestic rates and international growth. The decrease in Content and other revenues was due to lower domestic licensing revenues, partially offset by higher international licensing revenues.
Warner Bros revenues increased due to a 44.9 percent y-o-y gain in its Theatrical product to $1,605 million in Q3-16 from $1,108 million. This gain was offset by a 2.1 percent y-o-y decline in Warner’s Television product to $1,430 million from #1,460 million and a 41 percent decline in its ‘Videogames and other’ revenue to $367 million from$672 million.
The company says that Theatrical revenues increased due to the box office releases of Suicide Squad, The Legend of Tarzan, Sully and Lights Out. Videogames revenues declined due to the comparison to the launch ofLEGO Dimensions and carryover revenues from Mortal Kombat X in the prior year quarter.
Warner Operating Income increased 11.2 percent ($43 million) y-o-y in the current quarter to $428 million from $385 million, due to the increase in revenues, partially offset by higher costs of revenues associated with the mix of film releases.
Time Warner chairman and CEO Jeff Bewkes said, “We had a strong third quarter, which keeps us on track to exceed our original 2016 outlook and underscores our leadership in creating and distributing the very best content. In television, HBO took home more Primetime Emmy Awards than any other network for the 15th consecutive year and Time Warner’s divisions won a total of 40 Emmys, more than any other company. CNN’s standout election coverage made it the #1 news network in primetime among adults 18-49 for the fourth consecutive quarter and Turner’s momentum doesn’t stop there. Year-to-date, TBS, TNT and Adult Swim are three of the top five ad-supported cable networks in primetime among adults 18-49. In film, Warner Bros. had a strong quarter led by Suicide Squad and has the #1 release of the fall in Sully, while anticipation is off the charts for J.K. Rowling’s Fantastic Beasts and Where to Find Them, which hits the big screen on November 18.”
Bewkes continued, “The agreement we announced on October 22 to be acquired by AT&T Inc. represents a great outcome for our shareholders and an excellent opportunity to drive long-term value well into the future. Combining with AT&T is the natural next step in the evolution of our business and allows us to significantly accelerate our most important strategies.”