Time Warner posts record Q4; HBO strong


Time WarnerThe company’s quarterly revenues were $8.6 billion in the quarter, up 5% from growth at Warner Bros., Turner and Home Box Office. Adjusted Operating Income decreased 2% to $1.9 billion in the quarter due to declines at Turner, Time Inc. and Home Box Office, partially offset by an increase at Warner Bros. Analysts had expected earnings of $1.15 per share on revenue of $8.39 billion. Operating Income decreased 9% to $1.8 billion. Adjusted Operating Income and Operating Income margins were 23% and 22% in Q4, respectively, compared to 24% and 25% in the prior year quarter, respectively. Turner, Home Box Office and Warner Bros. all posted record Adjusted Operating Income for the full year.

For the quarter, Time Warner posted adjusted EPS of $1.17, up 1% from $1.162 for the year-ago quarter. Diluted Income per Common Share from Continuing Operations was $1.06 compared to $1.152 in the prior year quarter.

On 3/6/13, Time Warner announced that its Board authorized management to proceed with plans for the complete legal and structural separation of Time Inc. from Time Warner. In 2013, excluding Time Inc., revenues increased 4%, Adjusted Operating Income grew 9% and Operating Income rose 14%.

Noted Marci Ryvicker, Senior Analyst at Wells Fargo Securities: “Q4 revenue beat across the board. Revenue was $8.565B (+5%) vs. our $8.497B (+4%) and Consensus of $8.385B (+3%)–with beats in Networks (now split into Turner and HBO), Film (now Warner Brothers) and Publishing (Time Inc.). Combined Turner and HBO revenue (comparable to our Networks) was $3.808B (+4%) v. our $3.789B (+3%), due to stronger subscriptions (+7% v. our +6.5%), with HBO driving the difference at +8% and Turner at +6%. Advertising was light at Turner (+1% v. our +2%) – HBO has no advertising. Warner Bros. revenue was $3.996B (+7%) vs. our $3.963B (+6%) – with strength from Gravity and The Hobbit. Time Inc. revenue was $966MM (0%) v. our $926MM (-4%) – as advertising +2% v. our (-4%) and subscriptions of (-6%) v. our (-7%) beat.”

Said Time Warner Chairman and CEO Jeff Bewkes: “We had another very successful year in 2013, with Turner, Home Box Office and Warner Bros. all posting record profits while also investing for future growth. We grew Adjusted Operating Income by 8% and Adjusted EPS by 16% — our fifth consecutive year of double-digit Adjusted EPS growth. Among Turner’s highlights, TBS ranked as ad-supported cable’s #1 network in primetime among adults 18-49 and TNT was the #2 network in total day among adults 25-54. Adult Swim had the most-watched year in its history and ranked #1 on ad-supported cable among adults 18-34 in total day for the ninth year in a row. HBO remains in a league of its own, once again receiving the most Primetime Emmy Awards of any network, while tying for the most Golden Globe Awards and recording its biggest gain in domestic subscribers in 17 years. Warner Bros. delivered its best year on record by any measure. Theatrically, it led both the domestic and international box office, and its films received an industry-leading 21 Academy Award nominations —including Best Picture nominations for Gravity and Her. In television, Warner Bros. has over 60 programs airing on broadcast and cable during the 2013-2014 television season, including, among adults 18-49, the #1 comedy in The Big Bang Theory, the #1 unscripted show in The Voice and the #3 drama in The Following.”

In Q4, the company separated its former Networks reportable segment into two reportable segments: Turner and Home Box Office. TW also changed the names of its Film and TV Entertainment reportable segment to Warner Bros. and its Publishing reportable segment to Time Inc. The new presentation had no impact on the historical consolidated financial information previously reported.

Bewkes continued: “We also remain on track for the separation of Time Inc. into an independent publicly-traded company during the second quarter of 2014. And our plans to consolidate our New York City area operations into a single new location reflect our unrelenting focus on increased efficiency and collaboration. Demonstrating our commitment to stockholder returns, in 2013, we returned nearly $5 billion to our stockholders in the form of share buybacks and dividends. Furthering this commitment, our Board of Directors has authorized a new $5 billion share repurchase program and a double-digit increase in our dividend for the fifth consecutive year.”

FY revenues increased 4% from 2012 to $29.8 billion and Adjusted Operating Income rose 8% from 2012 to $6.6 billion as growth at Turner, Home Box Office and Warner Bros. and a decrease in intercompany eliminations more than offset a decline at Time Inc. Operating Income increased 12% from 2012 to $6.6 billion. Adjusted Operating Income and Operating Income margins were 22% in 2013 compared to 21% in 2012.

The Company posted 2013 adjusted EPS of $3.77, up 16% from $3.242 in the prior year. Diluted Income per Common Share from Continuing Operations was $3.77 compared to $3.002 in 2012.

On 2/4/14, the Board increased the company’s regular quarterly dividend by 10% to $0.3175 per share.