Time Warner Q2 Profit Tops View, But Revenues Miss; Takes 10% Stake In Hulu

(RTTNews) - Time Warner Inc. (TWX) reported a profit for the second quarter of 2016 that declined about 2 percent from the prior year, while quarterly revenues decreased about 5.4%. It increased its 2016 full-year Adjusted earnings per share outlook. Adjusted earnings per share topped analysts' expectations, while quarterly revenues missed their estimates.

Separately, Time Warner also announced its 10% investment in Hulu LLC and that Turner has separately signed an affiliate agreement for its full suite of networks to be carried on Hulu's live-streaming service slated for launch early next year.

In the pre-market trade TWX is trading at $77.10, up $1.32 or 1.74 percent.

The Company now expects its 2016 full-year adjusted income per common share from continuing operations to be in the range of $5.35 to $5.45, compared to prior outlook of $5.30 to $5.40. Analysts expect annual earnings of $5.39 per share.

Net income attributable to shareholders for the second-quarter declined 1.96 percent to $952 million from the prior year's $971 million, while earnings per share improved to $1.20 from $1.16 last year. The increase in earnings per share primarily reflected fewer shares outstanding.

But, adjusted earnings per share improved to $1.29 from $1.25 in the prior year, reflecting fewer shares outstanding and a lower effective tax rate. Analysts polled by Thomson Reuters expected the company to report earnings of $1.16 per share for the quarter. Analysts' estimates typically exclude special items.

Operating Income decreased 1% to $1.8 billion due to decreases at Warner Bros. and Home Box Office, partially offset by a swing in intersegment eliminations. Adjusted Operating Income declined 5% to $1.8 billion.

Revenues for the quarter decreased about 5.4% to $6.95 billion from last year's $7.35 billion due to a decline at Warner Bros., partially offset by growth at Turner and Home Box Office and lower intersegment eliminations. Wall Street expected revenues of $7.05 billion for the quarter. Revenues included the unfavorable impact of foreign exchange rates of approximately $60 million in the quarter.

In Turner, Revenues increased 6% to $3.0 billion, due to increases of 11% in Subscription revenues and 6% in Advertising revenues, partially offset by a decline of 15% in Content and other revenue.

InHome Box Office, Revenues increased 2% to $1.5 billion, due to an increase of 6% in Subscription revenues partially offset by a decline of 17% in Content and other revenues.

In WARNER BROS., Revenues decreased 19% to $2.7 billion, primarily due to lower videogames, home entertainment and television licensing revenues. Videogames revenues declined as the prior year quarter included the releases of Batman: Arkham Knight and Mortal Kombat X. Home entertainment revenues declined due to fewer theatrical home video releases in the current year quarter, including the comparison to the release of American Sniper in the prior year quarter, and lower carryover revenues. Television licensing revenues declined as the prior year quarter benefited from the second-cycle syndication of The Big Bang Theory and the subscription video-on-demand licensing of Seinfeld.

Time Warner also announced that its Board of Directors declared a regular quarterly cash dividend of $0.4025 per share of Common Stock, payable in cash on September 15, 2016 to shareholders of record on August 31, 2016.

Separately, Time Warner said that it will become a 10% owner of Hulu LLC, the premium streaming TV service that offers the best of current season programming, premium original content, films and full seasons of hit series. Time Warner joins The Walt Disney Company, 21st Century Fox, and Comcast in the joint venture.

Hulu will continue its current offering of ad-supported and ad-free subscription video on demand products to complement both traditional pay TV packages as well as the new streaming service. The company also remains focused on acquiring iconic and award-winning programming like Empire, Homeland, Seinfeld, Curious George, South Park and Fear The Walking Dead, as well as creating original programming that builds upon its success with shows such as The Mindy Project, The Path, Difficult People, 11.22.63 and the Golden Globe® -nominated Casual.