Time Warner Inc.'s profit easily topped Wall Street expectations
in the second quarter, as new videogame releases helped drive
revenue higher in its Warner Bros. division.
Time Warner, which also owns cable channels HBO, TNT and CNN,
has been working to adjust its business model as the Internet
remakes the television landscape, in part by targeting so-called
"cord-cutters," or people who don't subscribe to pay TV.
In April, the company began selling a broadband-only version of
HBO, dubbed HBO Now, through both digital distributors such as
Apple Inc. and traditional partners such as Cablevision.
The online HBO offering helps Time Warner compete for the
growing audience of people who consume their programming on the Web
from Netflix Inc. and others. But the move risks alienating
companies that have distributed Time Warner's programming for
decades.
Chief Executive Jeff Bewkes said Wednesday that Time Warner is
"investing aggressively to position the company for continued
growth, including the successful launch of HBO Now."
In the latest quarter, Warner Bros., the largest top-line
contributor, saw revenue grow 15% to $3.3 billion. Time Warner said
the growth was driven by higher videogame revenue, due to releases
of "Batman: Arkham Knight" and "Mortal Kombat X." TV licensing
revenue also grew on syndication of "The Big Bang Theory" and
subscription video-on-demand licensing of "Seinfeld."
Revenue at Turner grew 2.8% to $2.83 billion as a 48% jump in
content revenue, driven by licensing of some content to Hulu,
offset a 1% decline in advertising revenue.
HBO revenue inched up 1.5% to $1.44 billion.
In all, for the quarter ended June 30, Time Warner reported
earnings of $971 million, or $1.16 a share, up from $850 million,
or 95 cents a share, a year earlier. Excluding some items, earnings
were $1.25 a share.
Revenue grew 8.2% to $7.35 billion.
Analysts expected earnings of $1.03 a share on revenue of $6.9
billion.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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