Time Warner Outlook Solid; Revenue Misses--Update
February 10 2016 - 08:48AM
Dow Jones News
By Lisa Beilfuss
Time Warner Inc. offered an upbeat forecast for the year after
topping earnings expectations in its fourth quarter, thanks to
lower costs and continued gains in its HBO segment.
Separately on Wednesday, Time Warner raised its quarterly
dividend 15% to $1.61 a share and said its board approved $5
billion in additional share repurchases.
Still, shares declined 5.1% in premarket trading as revenue fell
short of analysts' expectations.
Time Warner, the owner of Warner Bros. film studio and cable
channels HBO, TNT and CNN, has been grappling with cable TV
subscriber declines and the rise of online streaming. The company
has said it would invest more in digital platforms and consider
holding back more of its television shows for longer on its own
platforms before selling them to streaming services like Netflix
Inc., and it has engaged in talks to buy a stake of Hulu, another
streaming service.
In its latest quarter, Time Warner said it grew HBO subscribers,
both through traditional networks as well as through its
stand-alone streaming service HBO Now. Strength in HBO--which
includes programs like Game of Thrones and True Detective--helped
offset weakness in the Time Warner's film segment. HBO revenue rose
5.5% to $1.41 billion, while Warner Bros. revenue tumbled a
worse-than-expected 15% amid a dearth of blockbusters. In the Tuner
business, increased advertising and the airing of Major League
Baseball playoffs helped revenue edge 2.1% higher.
Overall revenue declined 5.9% from a year earlier, due to the
effect of a stronger dollar coupled with the Warner Bros. weakness.
Lower expenses, though, countered the effect of lower revenue and
pushed earnings up 19% from the year-ago quarter.
Restructuring costs fell sharply from a year earlier and the
company managed to push overhead costs lower by 16%. In the
year-ago period, Time Warner booked charges associatiated with its
marketing and development of HBO Now in addition to restructuring
expenses stemming from the closure of CNN Latino and the separation
of Time Inc., among other items.
In all for the quarter, Time Warner reported profit of $857
million, or $1.06 a share, up from $718 million, or 84 cents, a
year earlier. Revenue slid 5.9% to $7.08 billion. Analysts surveyed
by Thomson Reuters had projected $1.01 in adjusted profit per share
on $7.53 billion in revenue.
For the year, Time Warner said it expects to earn an adjusted
$5.30 to $5.40 a share this year, above the $5.26 analysts have
projected and up from its earlier prediction of $5.25 a share.
Shares in the company, down 9.4% over the past three months
through Tuesday's close, declined 4.5% in premarket trading.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
February 10, 2016 08:33 ET (13:33 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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