Time Warner Profit Tops Estimates as Wonder Woman Saves DayBy and
Warner Bros studio sales rise 12% thanks to superhero film
Turner revenue also up as subscription sales offset ad drop
Wonder Woman’s big-screen heroics delivered big profits for Time Warner Inc.
The parent of the Warner Bros. studios, CNN and HBO, which is awaiting approval to be acquired by AT&T Inc., reported second-quarter earnings that beat analysts’ estimates. The company’s Warner Bros. studio has seen box-office sales rise thanks to the summer superhero feature “Wonder Woman,” with domestic receipts up 9.6 percent this year, according to researcher Box Office Mojo.
“When you’re in a movie studio, it’s hard to find these hit movies, so when you have a hit movie it can definitely move the needle,” said Paul Sweeney, a Bloomberg Intelligence analyst. For AT&T, "these results confirm that Time Warner is in a competitive position and that its business is performing well" going into the merger.
The results were an encouraging sign for AT&T, which is awaiting approval to buy Time Warner. Time Warner said in a statement Wednesday it continues to expect the deal to close before the end of this year. John Stankey, who ran AT&T’s DirecTV division, will supervise integration planning for the merger and lead the Time Warner businesses after the deal closes, AT&T said last month, confirming an earlier report by Bloomberg News.
Excluding some items, Time Warner posted quarterly profit of $1.33 a share, compared with the $1.19 average of predictions. Sales rose to $7.33 billion, in line with estimates of $7.32 billion. Sales at the Warner Bros. studio rose 12 percent in the quarter to $3 billion due to the box-office success of "Wonder Woman" and home entertainment revenue from the release of the "The LEGO Batman Movie.
The shares rose 0.3 percent to $102.68 at the open of trading in New York.
Time Warner has been charging pay-TV providers like Comcast Corp. higher fees for its cable channels to counter rising costs for sports programming and shrinking subscribers to its cable networks. Sales at its Turner unit rose 3 percent to $3.1 billion as an increase in subscription revenue made up for a 6 percent drop in advertising sales. The lower ad revenue was due to a decline in ratings at its cable networks and tough comparisons to last year when its channels aired the NCAA Men’s Basketball Championship and Final Four games.
HBO’s sales rose 1 percent to $1.5 billion as an increase in subscription revenues was partially offset by a decline in home entertainment and international licensing sales.
The New York-based company has hedged against the rise of cord-cutting, or people dropping their cable subscriptions, with investments outside the conventional pay-TV business. They include buying a 10 percent stake in the Hulu streaming service and introducing online channels like HBO Now for consumers who don’t pay for cable.