Time Warner Operating Profit Falls on Higher Costs
April 26 2018 - 02:27PM
Dow Jones News
By Allison Prang
Time Warner Inc.'s adjusted operating income fell more than 8%
in its latest quarter, dropping across Turner, Home Box Office and
Warner Bros., as rising expenses offset revenue gains in some
segments.
The company reported adjusted operating income -- a metric that
measures operating income without impacts including its proposed
deal with AT&T -- fell 8.2% from a year ago to $1.98 billion.
The metric fell 25% for the company's Warner Bros. division.
Time Warner said Warner Bros. was hurt by lower revenue from its
theatrical and television divisions, which it blamed on "the mix
and timing of releases."
Overall revenue rose 3.4% to $8 billion. Revenue at Turner
climbed 8.3% as advertising and subscription revenues increased.
Higher domestic rates helped drive the subscription revenue
increase as did international networks, but the company reported a
decline in its domestic market.
AT&T Inc. is currently trying to buy Time Warner, but the
deal's fate is unclear and being tried in court after the Justice
Department last year tried to stop the deal with a lawsuit because
it was concerned about the deal's impact on competition. Last week,
AT&T Chief Executive Randall Stephenson said in testimony that
Time Warner "met all the needs we were looking for" and referred to
the proposed transaction as a "vision deal." The two companies
agreed to the deal in October 2016.
As part of the deal, Time Warner has granted 5.7 million shares
of restricted stock as of March 31 to certain employees as part of
a retention plan. The company also said it has implemented
incentive plans for some employees including executive officers,
but not the CEO or chairman.
Time Warner said Thursday that costs tied to a merger with
AT&T were $146 million during the quarter, up from $82 million
for the same period a year ago. Selling, general and administrative
costs -- where most of these expenses were recorded -- climbed 10%
to $1.4 billion. Cost of revenue rose 8.9% to $4.72 billion.
The company reported its profit rose 15% in the latest quarter
to $1.64 billion, or $2.07 a share. On an adjusted basis, Time
Warner made $2.28 a share, compared with $1.66 a share a year
ago.
Analysts polled by Thomson Reuters were expecting adjusted
earnings of $1.74 a share and revenue of $7.91 billion.
Shares were down 2.7% midday Thursday. In the past 12 months,
they have fallen 6.3%.
Write to Allison Prang at allison.prang@wsj.com
(END) Dow Jones Newswires
April 26, 2018 14:12 ET (18:12 GMT)
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