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Time Warner Reports Strong Fourth Quarter Thanks to HBO, MLB

Time Warner beat Wall Street expectations with a robust fourth quarter earnings report that was powered by record subscriber growth at HBO and interest in Major League Baseball’s post-season.

Time Warner’s adjusted earnings per-share topped out at $2.66 on $8.6 billion in revenue, a better-than-anticipated result. Operating income increased 13% to $1.9 billion and adjusted operating income climbed 9% to $1.9 billion. Analysts had projected earnings per share of $1.43 on revenue of $8.42 billion. Without adjustment, earnings per share hit $1.75.

The salubrious financial picture comes at a time of great corporate uncertainty at Time Warner. The Justice Department is challenging its $85.4 billion sale to AT&T, potentially putting its plans to become a part of the telecom giant in jeopardy. Because of the pending sale, Time Warner will not host a call with analysts this morning.

Time Warner divvies up its earnings among its Turner Networks, HBO, and Warner Bros. divisions. Revenues at Turner, which includes TNT and CNN, increased 10% to $3.1 billion, due to higher subscription and ad income. The better ad sales was attributable to interest in major league baseball’s post-season games, which air on TNT. Operating income increased 22% to $1 billion.

Revenues at HBO also rose, climbing 13% to $1.7 billion, while operating income at the pay-cable channel behind “Game of Thrones” and “Veep” increased 13% to $486 million. HBO said it had its highest increase in domestic subscribers ever in 2017 and its best subscription revenue growth in more than 20 years.

Warner Bros. closed the year with its best global box office results in history, topping $5 billion on hits such as “Dunkirk” and “It.” However, the last quarter of 2017 was a bit of a dud, with “Justice League” failing to ignite commercially. Revenues at the studio increased 5% to $4.1 billion, as video game sales for “Middle-earth: Shadow of War” helped offset declines in theatrical revenues. Operating income at Warner Bros. fell 11% to $512 million.

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