Time Warner touts HBO and details its performance

There's been no Netflix effect on HBO.

Time Warner Chief Executive Jeff Bewkes, who used to mock Netflix as the "Albanian army" coming to take over the world, said its success doesn't hurt HBO either in terms of revenue or eyeballs.

Talking to investors and analysts about its fourth-quarter and year-end earnings, Bewkes noted that HBO and its sister channel Cinemax added 2 million subscribers last year. Overall HBO is in 130 million homes around the globe compared to 44 million for Netflix.

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Households that have Netflix and HBO, Bewkes said, tend to watch more of each other's service than households that don't.

While Time Warner has never been shy about noting how powerful HBO is, the company is now breaking out the financial performance for its premium channel unit instead of combining the results with its Turner Broadcasting holdings.

"HBO remains in a league of its own," Bewkes said.

For 2013, HBO had profits of almost $1.8 billion on revenue of $4.9 billion. While Netflix had revenue of $4.3 billion last year, its profit was $228 million. For the quarter, HBO's revenue was up 6% to $1.3 billion, thanks to increased subscription fees. Operating income, however, dropped 4% to $413 million due to higher programming costs and the consolidation of HBO Asia and HBO Nordic.

Overall, for the fourth quarter Time Warner had profits of $983 million, or $1.15 per share, compared to $1.1 billion, or $1.17 per share for the same quarter in 2012. The 12% decline was due to larger programming costs and $105 million in asset impairments, the majority of which was related to the soon-to-be-spun-off publishing unit Time Inc.

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Revenue for the quarter was up 5% to $8.6 billion.

Thanks to the hit movies "Gravity" and "The Hobbit: The Desolation of Smaug," and the continued strength of its television production arm, Warner Bros. saw revenue grow by 7% to almost $4 billion. Operating income was up 4% to $573 million.

It was a tougher quarter for Turner, home of cable networks TBS, TNT, TruTV and CNN. Revenue was up just 3% to $2.5 billion as ad sales were virtually flat compared to the same period a year ago. CNN in particular had a tough quarter in terms of advertising because of a lack of political advertising. Operating income was $853 million, a drop of 10%.

Time Warner said when it spins off Time Inc. later this year, the publishing company will have a debt load of $1.3 billion. On Tuesday, Time Inc. started the process of making cuts across its operations in anticipation of going public. About 500 people are expected to be let go.

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Follow Joe Flint on Twitter @JBFlint.

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