Time Warner turned in an upbeat third quarter with revenue jumping 9 percent and operating income rising 10 percent, thanks in part to strong performances by Turner and HBO.
Turner’s revenues increased 9 percent to $2.6 billion, on the strength of a 12 percent rise in Subscription revenues, a 33 percent rise in Content and other revenues, and a 2 percent rise in Advertising revenues. Turner gave credit for the Subscription revenue boost to higher domestic rates and growth at Turner’s international networks, which was partially offset by the impact of lower domestic subscribers and foreign exchange rates. Advertising revenues saw growth within the domestic news business, lower revenues at certain domestic entertainment networks, and flat International advertising. Content and other revenues ticked up thanks to international licensing revenues.
In all, Turner’s operating income increased 8 percent to $1.2 billion despite higher expenses including a 5 percent increase in programming costs.
At HBO, revenues increased 4 percent to $1.4 billion, driven by a 5 percent rise in Subscription revenues and partially dinged by a 2 percent decline in Content and other revenues, due to lower domestic licensing revenues.
HBO’s operating income rose 2 percent to $530 million, partially affected by a 15 percent increase in programming costs reflecting higher acquired theatrical programming expenses.
“We had a strong third quarter, which keeps us on track to exceed our original 2016 outlook and underscores our leadership in creating and distributing the very best content,” said Time Warner CEO Jeff Bewkes in a statement. “In television, HBO took home more Primetime Emmy Awards than any other network for the 15th consecutive year and Time Warner’s divisions won a total of 40 Emmys, more than any other company.”
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“The agreement we announced on October 22 to be acquired by AT&T Inc. represents a great outcome for our shareholders and an excellent opportunity to drive long-term value well into the future," said Bewkes. "Combining with AT&T is the natural next step in the evolution of our business and allows us to significantly accelerate our most important strategies.”
Time Warner’s $7.2 billion in consolidated revenue, $2 billion in operating income, and $1.86 adjusted EPS (up 46 percent) were enough to top Wall Street estimates and cause Time Warner’s stock to spike in early morning trading.