Time Warner profit jumps 17%, lifted by ‘Lego Batman,’ ‘Kong’ and NCAA basketball
Time Warner Inc. roared past Wall Street’s expectations with first-quarter profit up 17%, thanks to higher fees for its TV networks and strong theatrical results by Warner Bros.’ “The Lego Batman Movie” and “Kong: Skull Island.”
The strength of Time Warner’s programming, including its premium HBO channel, illustrates why phone company AT&T Inc. is eager to buy the New York media company. AT&T is trying to win federal approval for its planned $85.4-billion takeover of Time Warner, which was announced in October.
For the January-through-March quarter, Time Warner posted revenue of $7.7 billion, up 6% from the same quarter last year.
Net income increased 17% to $1.4 billion, or $1.80 a share, up from $1.2 billion, or $1.51 a share, a year earlier.
Adjusted earnings came in at $1.66 a share, up from $1.49 in the year-earlier quarter. Analysts expected adjusted earnings of $1.45 a share on revenue of $7.67 billion, according to FactSet.
“We continued our momentum into 2017 and delivered a strong first quarter that sets us up very well to achieve our goals for the year,” Time Warner Chief Executive Jeffrey Bewkes told media analysts on a Wednesday morning conference call.
Wall Street has been worried about signs of a weakening advertising market, in part because of a pullback in auto advertising. Advertising is typically a bellwether for the U.S. economy. Ad revenue was down 2% in the quarter at the Turner networks, largely because of lower ratings for its programming.
At the Burbank-based Warner Bros. studio, the company’s largest unit, revenue increased 8% to $3.4 billion, primarily due to higher TV and theatrical sales; video game revenue declined. “Kong: Skull Island” raked in more than $560 million at the global box office. “The Lego Batman Movie,” released in February, has racked up more than $308 million in box-office revenue worldwide.
“We are also very excited about Warner’s slate for the rest of the year,” Bewkes said, mentioning the releases of “Wonder Woman” next month and “Justice League” in the fall.
The studio bucked a trend of declining home video revenue because people bought copies of “Fantastic Beasts and Where to Find Them,” the latest movie set in the Harry Potter universe.
Warner Bros.’ operating income rose to $488 million, up 15% from the year-earlier period. It was weighed down slightly by higher advertising costs to promote its films.
Turner Broadcasting, Time Warner’s second-largest business unit, includes the cable channels TBS, TNT, Cartoon Network and CNN, which posted its most watched first quarter since 2003 because of heightened interest in President Trump. Turner’s ratings for the NCAA basketball tournament were up 16% compared with last year.
Turner’s revenue rose 6% to $3.1 billion. Subscription fee revenue was up 12%. But operating income declined 6% to $1.2 billion because of higher programming costs.
At HBO, revenue increased 4% to $1.6 billion because of higher subscription fees. Operating income jumped 22% to $583 million. HBO’s limited series “Big Little Lies” with Reese Witherspoon and Nicole Kidman averaged more than 8 million viewers an episode. Theatrical films also did well.
Ratings were up for the final season of Lena Dunham’s “Girls” and the current-events programs “Real Time with Bill Maher” and “Last Week Tonight with John Oliver.”
Shares of Time Warner were up 0.2% at $99.49 around 7:30 a.m. Pacific Time.
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