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Time Warner beat Wall Street’s expectations in the first quarter thanks to strong performances at premium cable network HBO, the Warner Bros film studio and the popularity of the college basketball tournament.
Net income rose 17 per cent to $1.4bn, or $1.80 a share, from $1.2bn, or $1.51 a share, a year ago. Excluding some items including costs related to its pending merger with AT&T, adjusted earnings of $1.66 a share beat analysts’ estimates of $1.45.
Revenue increased 6 per cent to $7.7bn from $7.3bn a year ago, ahead of estimates of $7.66bn.
“We’re off to a strong start to 2017, as we continue to benefit from the investments we’re making in the best content while also developing new revenue streams that will drive growth and meet consumer demand for great experiences built around their favourite programming and brands,” said Jeff Bewkes, chief executive.
Time Warner is in the middle of being acquired for $85bn by AT&T, which is looking to reinvent itself into a media and entertainment company. Mr Bewkes said the company was “on track” to complete the deal before the end of the year.
The company reported revenue gains across its divisions.
At Turner, home of cable channels including CNN, TBS and TNT, and the biggest contributor to Time Warner’s operating profits, revenue rose 6 per cent to $3.1bn. Increases in the affiliate fees pay-television operators pay to carry Turner channels, growth at Turner’s international networks, and higher licensing sales drove the increase.
However, the company said it had lost US subscribers as some Americans “cut the cord” on pricey cable packages. Advertising revenues at the Turner channels dropped 2 per cent. CNN, which had a record year in 2016, thanks to the US presidential election, was bright spot, recording ratings gains that powered it to its most-watched first quarter in 14 years.
The increase in Turner’s revenues was offset by higher programming expenses, mainly due to its renewed agreement with the National Basketball Association. Operating income fell 6 per cent to $1.2bn.
At HBO, the premium cable channel, revenue rose 4 per cent to $1.6bn on subscriber gains and higher prices. Operating income rose 22 per cent to $583m. Time Warner said the popularity of Big Little Lies, Last Week Tonight with John Oliver and the final season of Girls helped draw viewers.
Revenue was up 8 per cent to $3.4bn at Warner Bros, boosted by the box office success of The Lego Batman Movie and Kong: Skull Island. Operating income rose 15 per cent to $488m.