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Turner Scores With Hoops But Time Warner Net Income Drops

Time Warner reported lower net income in the first quarter despite big gains at Turner Broadcasting driven by March Madness.

Net income was $970 million compared to $1.3 billion a year ago. A big reason for the decline was the sale and leaseback of the company’s space in the Time Warner Center a year ago, which resulted in a $441 million gain a year ago. Excluding that, Time Warner said its adjusted operating income grew 12% to a record $1.8 billion, or $1.19 a share, up 23%.

Revenue rose 5% to $7.1 billion, more than Wall Street had been expecting.

The company reaffirmed its guidance that full year adjusted diluted earnings per share from continuing operations would be in the $4.60 to $4.70 range.

“We got off to a very strong start in 2015, with Revenues up 5%, and Adjusted Operating Income growing 12% to a quarterly record of $1.8 billion. This led to a 23% increase in Adjusted EPS and puts us on track to achieve our goals for the year," CEO Jeff Bewkes said in a statement. “We accomplished a lot in the quarter, led by Turner, which had its best quarter ever, with audience growth across a number of its networks.”

At Turner Broadcasting, operating income rose 23% to $1.1 billion. Revenue rose 5% to $2.7 billion. Ad revenues were up 4% because of the NCAA basketball tournament. Subscription revenues rose 3%. Content and other revenues rose 25%.

Turner’s expenses were lower for marketing and programming, and other cost were reduced by the big restructuring announced last year.

Operating income was down 1% to $458 million at HBO because of higher programming, distribution and marketing costs. The marketing costs were mostly because of the launch of the over-the-top streaming product HBO Now. 

HBO’s revenues grew 4% to $1.4 billon as domestic subscription rates rose.

Warner Bros. operating income fell 12% to $234 million because of higher film and advertising costs. Revenues rose 4% to $3.2 billion partly because of the SVOD sale of Friends.