Time Warner’s first-quarter earnings are staring down across-the-board declines at all operating divisions, and the result is a 13% decrease in operating income.
Despite revenues rising 3% to $8 billion due to growth at Turner and HBO, operating income decreased to $1.8 billion and adjusted operating income decreased 8% to $2 billion.
The somewhat downbeat results arrived as Time Warner and AT&T could be nearing the end of a lengthy legal battle with the Justice Department over the companies’ proposed $85 billion merger.
“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,” Time Warner CEO Jeff Bewkes said in a statement.
At Turner, revenues increased 8% to $3.3 billion amid growth in subscription, advertising, content and other revenues. Subscription increases were largely due to Turner’s international growth and advertising benefitted from Turner’s airing of the NCAA Division I Men’s Basketball Tournament. Despite the revenue growth, Turner’s operating income fell 7% to $1.1 billion as higher expenses due to programming and marketing costs took their toll. The segment’s adjusted operating income fell 5%.
At HBO, revenues increased 3% to $1.6 billion as a 10% jump in subscription revenue helped offset a 29% decline in content and other revenues due to lower international licensing revenues. Operating income for HBO fell 12% to $516 million as programming costs spiked due to higher spending on acquired and original programming.
At Warner Bros., results were all down. Revenues fell 4% to $3.2 billion due to lower television and theatrical revenues, and operating income fell 34% to $322 million thanks to the decline in revenues.