Profits at the entertainment conglomerate beat Wall Street expectations with earnings per-share of $1.33, up from $1.29 per-share in the prior-year period. Revenues grew 5% to $7.3 billion, even as operating income decreased 8% to $1.7 billion. Analysts had projected that Time Warner would post per-share earnings of $1.19 on revenue of $7.3 billion.
The earnings report comes as Time Warner is awaiting government approval for its $85 billion sale to AT&T. The company said it expects the deal will close by the end of 2017. Even without the bureaucratic rubber stamp, AT&T is moving forward with plans to integrate Time Warner into the fold. The telecom giant announced last week that John Stankey will serve as CEO of its media group, giving him control of Time Warner’s properties. Time Warner’s portfolio includes its film studio Warner Bros., its cable division Turner, and the premium cable giant HBO.
It was a mixed quarter for Warner Bros., which saw revenues climb 12% to $3 billion as “Wonder Woman” packed in crowds and “Fantastic Beasts and Where to Find Them” debuted on home entertainment platforms. Operating income decreased 28% to $223 million, however, on higher print and advertising expenses. The studio also suffered a huge flop with “King Arthur,” its misguided attempt to scuff up the Round Table set.
HBO’s revenues increased 1% to $1.5 billion on higher subscriber numbers. The channel behind “Game of Thrones” and “Veep” did experience declines in home entertainment and international licensing revenues. Operating income increased 10% to $531 million aided by lower programming costs.
And Donald Trump continues to be good business for news organizations. The White House’s hyper-metabolic approach to news cycles resulted in big ratings for CNN, one of Turner’s flagship properties. It was CNN’s most-watched second quarter ever. Turner’s revenues increased 3% to $3.1 billion, with higher subscriber numbers offsetting advertising declines. Operating income decreased 7% to $1.1 billion, as a new agreement to broadcast NBA games led to increased programming expenses.
“These results and accolades reflect strong execution and the investments we’ve been making, both in the best content and in ensuring that we deliver our content across platforms to offer engaging experiences for our audiences,” Time Warner CEO Jeff Bewkes said in a statement. “Accelerating our pace of innovation and being able to connect more directly with consumers are among the exciting reasons for our proposed merger with AT&T.”
Time Warner will not host an earnings call with analysts due to its pending sale to AT&T.