"Batman v. Superman: Dawn of Justice" arrives in theaters in late March, and Warner Bros. desperately needs some heroes. Hollywood's largest movie and TV studio's theatrical woes put a drag on the financial results of its parent company, Time Warner, during the fourth quarter of 2015.
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Warner Bros. suffered through a string of misses in the October-December quarter, including "Pan" with
FOR THE RECORD
Feb. 10, 11:32 a.m.: An earlier version of this article stated that George Clooney was in "Our Brand Is Crisis." He was a producer on the film, not an actor.
The Burbank film and TV studio brought in $510 million less revenue than the year-earlier period. That translated into a revenue decline of 13% to $3.3 billion, primarily because of lower than expected box office sales.
The movie "Creed" was a bright light, but Warner Bros. faced tough comparisons against the year-earlier period, which included the releases of such crowd-pleasers as "The Hobbit: The Battle of the Five Armies" and "Interstellar." This year should be much better.
"2016 is also set to be a blockbuster year at Warner Bros.," Time Warner Chief Executive Jeff Bewkes told analysts Wednesday during an earnings call. "We are expecting another record performance, this time led by our theatrical business."
Warner Bros.' TV operations and its video game business kept the studio in the game. Fourth-quarter adjusted operating income for the studio declined 5% to $373 million.
For the full year, Warner Bros. studio revenue increased 4% to $13 billion. The video game division had its best year ever in 2015, with the releases of "Mortal Kombat X," "Lego Dimensions," and "Batman: Arkham Knight." The studio also enjoyed higher TV licensing revenue, including from the sales of such shows as "2 Broke Girls," "The Big Bang Theory" and "Seinfeld."
Time Warner's stock slipped a bit Wednesday morning but recovered by midday to around $62 a share.
Investors seemed sour after earnings calls Tuesday from Viacom Inc. and Walt Disney Co., which confirmed that consumers have been opting for smaller cable TV packages, reducing the distribution footprints of key cable networks like ESPN.
Time Warner executives, however, offered an upbeat assessment of its financial picture for the year. The company beat analyst expectations for fourth-quarter profit -- but missed on revenue.
Time Warner earned $857 million, or $1.06 a share, up from $720 million, or 84 cents, in the year-earlier period. Companywide revenue declined nearly 6% to $7.1 billion.
Analysts were expecting earnings of $1.01 a share in adjusted profit and about $7.53 billion in revenue.
"We remain positively inclined on the company's favorable business skew towards high-quality content production," Doug Creutz, a Cowen & Co. analyst, wrote in a Wednesday morning report.
"The company also has a relatively low exposure to domestic national TV advertising, which we view as a positive," he said.
The Turner family of TV networks continue to be a workhorse for the company. There, revenue increased 2% to $2.7 billion on the strength of improved advertising sales at CNN and for sports programming for the Major League Baseball playoffs, which included more games.
Operating income at Turner was down due to higher programming costs, including baseball. Cartoon Network showed ratings growth.
CNN has significantly improved its ratings, and the unit is riding high thanks to strong voter interest in the U.S. presidential race.
The cable news channel, which was on the ropes a few years ago, now is a contender, which should contribute to Time Warner's financials throughout the year.
CNN also is notching huge gains with its CNN mobile app, which is bringing young consumers into the CNN tent.
"Right now our news business is killing it," Turner Chief Executive John Martin told analysts.