Turner, HBO score for Time Warner but OTT subs growth slows


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Joseph O'Halloran

| 11 February 2016




Media giant Time Warner has revealed modest gains in its 2015 financial year, buttressed by strong performance in its Turner and Home Box Office (HBO) divisions.



For the fiscal 12 months ended 31 December 2015, the company reported that full-year revenues and adjusted operating income increased 3% and 19% respectively from 2014 to $28.1 billion and $6.9 billion. The growth in adjusted operating income was said to have benefited from lower programming charges at Turner and restructuring and severance charges across the company as a whole, partially offset by a swing in intersegment eliminations. Revenues and adjusted operating income included the unfavourable impact of foreign exchange rates of approximately $1.1 billion and $480 million, respectively, in the year. Operating income increased 15% from 2014 to $6.9 billion.

For the fourth quarter, revenues decreased 6% to $7.1 billion due to a decline at Warner Bros and partially offset by increases at HBO and Turner. Adjusted Operating Income declined 12% to $1.4 billion due to decreases at all operating divisions as well as a swing in intercompany eliminations. Operating income was flat at $1.4 billion as the prior year quarter included a $173 million foreign currency charge related to the re-measurement of net monetary assets.

Analysts have reacted indifferently to the results, especially after HBO CEO revealed on an earnings call that the HBO Now over-the-top (OTT) service ended the year on 800,000 subscribers, way below both Wall Street expectations and projections made by the company itself.

Undeterred by the criticism, commenting on the results Time Warner’s CEO Jeff Bewkes said: “We had another very successful year in 2015, demonstrating once again Time Warner’s ability to deliver strong financial performance as well as creative and programming excellence ... All three of our operating divisions increased revenue and profits while also investing to capitalise on the shift to on-demand viewing and growing worldwide demand for the very best video content.”