×

Time Warner Q1 Earnings Rise But Higher Content Costs Take Toll

Time Warner saw a year-over-year decline in operating income in the first quarter largely due to higher programming and marketing costs at Turner and HBO.

Time Warner reported revenue of $8 billion, a 3% increase from the year-ago quarter. Adjusted operating income fell 8% to $2 billion. Earnings per share came in strong, up 15% from year-ago to $2.07, topping analysts’ expectations.

The results come as Time Warner is awaiting a decision on the fate of its $85.4 billion merger with AT&T, which the Justice Department has sued to block. The trial in Washington, D.C. is heading toward a close early next month.

Time Warner reaffirmed its full-year guidance for adjusted operating income growth in the high single digits. Gains in subscription revenue at HBO (up 10%) and Turner (up 8%) were a positive sign for the cable units. Time Warner said HBO saw gains in its domestic subscriber base, another welcome sign for investors worried about the health of the pay-TV eco-system.

However, Turner saw a 21% spike in programming costs due to the cost of NCAA tournament rights and higher original programming costs at Turner’s entertainment cablers including TNT and TBS. Adjusted operating income at Turner was down 5% to $1.1 billion.

Programming expenses at HBO were up 8% while adjusted operating income fell 10% to $535 million.

“We’re off to a strong start to 2018 and we remain on track to meet the financial goals we laid out at the beginning of the year, as we continue to execute our strategic objectives, including investing in and delivering the most compelling content to audiences around the globe and across platforms,” Time Warner CEO Jeff Bewkes said. “We look forward to the resolution of the legal challenge to our pending merger with AT&T and remain excited about the benefits of the merger, such as the potential to further strengthen our businesses by accelerating our innovation and increasing our ability to connect more directly with consumers.”

Warner Bros. posted declines in the quarter due to tough comparisons to the year-ago period, when the studio had “Kong: Skull Island” and “Lego Batman Movie” in theaters and it inked domestic TV content licensing pacts. Revenue for the studio was down 4% in the quarter to $3.2 billion while adjusted operating income fell 25% to $383 million.

More Biz

  • Pinewood Studios James Bond

    Netflix's Shepperton Studios Deal Is Stretching the U.K.'s Production Limits

    Netflix’s huge new hub at Shepperton Studios outside London is a further fillip for Britain’s booming production sector. Amid jitters over Brexit and its effects on the economy, the streaming giant’s commitment is a vote of confidence in the U.K. entertainment industry and a continuing source of local jobs. But the decision by Netflix to [...]

  • It

    Producer Sues Warner Bros. Over 'It' Film Adaptations

    A producer who developed the original “It” TV miniseries sued Warner Bros. on Thursday, alleging the studio breached his contract by making the films “It” and “It Chapter Two” without him. Frank Konigsberg and Larry Sanitsky were running Telepictures in the early 1980s when they acquired the rights to the Stephen King novel. They developed [...]

  • Lionsgate CEO Jon Feltheimer

    Starz Nears Realignment: Why Lionsgate Won't Hire a CEO to Replace Chris Albrecht

    Nearly six months after Starz CEO Chris Albrecht exited in February, Lionsgate brass is moving closer to a revamp of the premium TV network’s executive structure. According to insiders, at least one thing is clear: Albrecht is not expected to be replaced as CEO. Instead, Lionsgate chief executive Jon Feltheimer is taking a more active [...]

  • Movie Ticket Subscriptions

    As MoviePass Fades, Theaters Fall In Love With Subscription Services

    MoviePass may be cratering, but movie theater subscriptions are here to stay. AMC and Cinemark already operate their own online ticketing services. And by the end of July, Regal Entertainment is expected to unveil a subscription plan for customers accustomed to getting all manner of entertainment for a monthly fee. With ticket sales down more [...]

  • John FordNPact Awards, Show, Los Angeles,

    John Ford to Exit as Head of Unscripted Producers Trade Association NPact

    John Ford has stepped down as general manager of NPact, the trade association that represents unscripted TV producers. Ford is exiting the post he’s held since 2015 because of the potential for conflicts of interest arising from his role as head of programming for digital multicast outlets Justice Network and Quest Network. The channels were [...]

  • Woodstock 50 Applies for Vernon Downs

    Woodstock 50 Applies for Vernon Downs Permit Yet Again

    For better or worse, Woodstock 50 isn’t giving up on Vernon Downs, despite being rejected twice already: The producers have applied for another permit to hold the festival at Vernon Downs, according to the Utica Observer Dispatch. Town Attorney Vincent Rossi confirmed the application was submitted Wednesday. This is the festival’s third application; previous applications [...]

  • Bert and Ernie

    Sally Field, Linda Ronstadt and 'Sesame Street' Among 2019 Kennedy Center Honorees

    Sally Field, Linda Ronstadt, “Sesame Street,” conductor Michael Tilson Thomas and R&B veterans Earth, Wind and Fire have been selected as the 2019 Kennedy Center Honorees. The kudos will be handed out Dec. 8 at the Kennedy Center Opera House in Washington, D.C. The award to “Sesame Street” marks the first time the prestigious laurel [...]

More From Our Brands

Access exclusive content