Time Warner Q1 Profit Rises, Tops Estimates; Reaffirms 2016 Adj. EPS View

(RTTNews) - Time Warner Inc. (TWX) reported a profit for its first quarter ended March 31, 2016 that increased about 25 percent from the prior year. Revenues increased 3% and adjusted operating income grew 11% due to strong growth across all its operating divisions. It reaffirmed its 2016 adjusted earnings per share outlook.

The company continues to expect its 2016 full-year adjusted income per common share from continuing operations to be in the range of $5.30 to $5.40. Analysts expect annual earnings of $5.35 per share.

Net income for the first quarter rose 25.2 percent to $1.214 billion from last year's $970 million, with earnings per share improving to $1.51 from $1.15 last year.

Adjusted income per common share from continuing operations were $1.49 compared to $1.19 for the prior year quarter. Analysts polled by Thomson Reuters expected the company to report earnings of $1.30 per share for the quarter. Analysts' estimates typically exclude special items. The increase in adjusted EPS primarily reflects higher adjusted operating income and fewer shares outstanding.

Adjusted Operating Income grew 11% to $2.0 billion due to growth across all operating divisions, partially offset by higher corporate expenses. Operating Income increased 12% to $2.0 billion.

Total revenues increased about 3% to $7.31 billion due to growth at Turner and Home Box Office, partially offset by a decline at Warner Bros. Wall Street expected revenues of $7.30 billion. Revenues included the unfavorable impact of foreign exchange rates of approximately $115 million in the quarter.

In Turner, Revenues increased 7% to $2.9 billion, due to increases of 11% in Subscription revenues and 5% in Advertising revenues. Subscription revenues increased due to higher domestic rates and local currency growth at Turner's international networks, partially offset by the impact of foreign exchange rates and lower domestic subscribers. Advertising revenues benefited from domestic growth, primarily due to Turner's news business, and local currency growth at Turner's international networks, partially offset by the impact of foreign exchange rates.

In Home Box Office, Revenues increased 8% to $1.5 billion, due to increases of 5% in Subscription revenues and 23% in Content and other revenues. Subscription revenues grew primarily due to higher domestic rates and subscribers. The increase in Content and other revenues primarily reflected higher international licensing revenues, partially offset by lower home entertainment revenues.

In Warner Bros., Revenues decreased 3% to $3.1 billion, mainly due to lower theatrical revenues, partially offset by higher television and videogames revenues. Theatrical revenues declined as the prior year quarter included revenues from American Sniper and The Hobbit: The Battle of the Five Armies compared to the release of Batman v Superman: Dawn of Justice late in the current year quarter. Television revenues increased primarily due to higher international licensing revenues and higher initial telecast revenues. The increase in videogames was mainly due to Warner Bros.' LEGO and Mortal Kombat franchises.

TWX closed Tuesday's regular trading at $73.64, down $1.68 or 2.23 percent.