Time Warner Income Slips Despite Turner, HBO Gains

Time Warner, preparing to be acquired by AT&T, reported gains at all of its operating units but reported lower third-quarter profits because of a tax gain a year ago.

Net income dipped to $1.372 billion, or $1.73 per share, in the quarter from $1.467 billion, or $1.86 per share a year ago. The company had a tax benefit worth 28 cents per share a year ago.

Revenues rose 6% to $7.6 billion.

The results topped Wall Street forecasts.

The company also reaffirmed its outlook for the full year, which calls for high-single-digit increases in adjusted operating income.

At Turner, operating income increased 7% to $1.2 billion as revenues rose, offset by increased programming and marketing costs. Programming expenses were up 8% because of an increase in original programming on Turner’s domestic entertainment networks, the company said.

Turner revenues were up 6% to $2.8 billion. Subscription revenue was up 13%. Advertising revenue was down 3% because of lower delivery at certain domestic networks.

The company said scatter pricing for advertising sales at Turner’s domestic entertainment networks has increased double-digits in the fourth quarter to date compared to this year’s upfront. It expects Turner’s total advertising revenues will increase in the low single-digits in the fourth quarter of 2017 compared to the prior year quarter.

Operating income was up 4% at HBO. Revenue growth offset higher marketing and programming costs; programming costs were up 7%.

HBO revenues increased 13%, including a 12% increase in subscription revenues.

“We delivered very strong third-quarter results, keeping us on track to achieve our objectives for 2017,” said CEO Jeff Bewkes. "Both Turner and Home Box Office achieved double-digit gains in Subscription revenues, including HBO’s highest quarterly growth in 13 years, while Warner Bros. had a terrific quarter in theatrical."

“The ability to accelerate our pace of innovation and connect more directly with consumers are among the reasons we are excited about our proposed merger with AT&T, which remains on track to close before year end, pending regulatory review and consents," Bewkes said.

Jon Lafayette

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.