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Tax Benefits Boost Q2 Earnings at Time Warner

Net income was $1.6 billion, or $2.07 a share, compared to $1.4 billion and $1.80 a share, a year ago. The increase in income reflects tax benefits from the new tax law and a settlement in a federal tax audit.

Operating income was down 13% to $1.8 billion.

Revenue rose 3% to $8 billion.

Time Warner reaffirmed its outlook for the full year of 2018, noting that the outlook does not include costs associated with the potential acquisition by AT&T, now being reviewed in Federal Court.

“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,” said CEO Jeff Bewkes.

“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,” Bewkes said.

At Time Warner’s Turner unit, operating income decreased 7% to $1.1 billion. An increase in programming expenses, caused mainly by higher costs for the college basketball Final Four, offset a 8% increase in revenues to $3.3 billion.

Subscription revenue was up 8% and advertising revenue rose 9%., with about 5% off that gain coming from the addition of the Final Four games.

Operating income at HBO was down 12% to $516 million. Programming expenses increase 8%, offsetting a 3% increase in revenues. Subscription revenue was up 10%, but content and other revenues fell 29%.

Warner Bros.’ operating income was down 34% to $322 million as revenues fell 4% to $3.2 billion.