The box office success of “It” and water cooler buzz around “Game of Thrones” fueled Time Warner‘s quarterly earnings, helping the media conglomerate trounce Wall Street’s expectations. The strong results come as Time Warner is selling itself to AT&T for $86 billion.
Revenues at the company behind HBO, CNN, and Warner Bros. jumped 6% to $7.6 billion for the three-month period ending in September. Over the same frame, operating income rose 11% to $2.2 billion and adjusted operating income climbed 13% to $2.3 billion. Earnings per share clocked in at $1.82. Stronger ticket sales and cable subscription increases helped offset declines in television advertising at Time Warner’s Turner division.
It all translated into an impressive quarter for the soon-to-be absorbed-by-a-giant-telecom media player. Analysts were predicting earnings of $1.59 on revenue of $7.39 billion.
Time Warner said it still expects the sale to AT&T to close by the end of 2017. It missed an Oct. 22 termination date for the deal, but AT&T extended the deadline for a short period. Due to the pending merger, Time Warner is not holding its standard conference call about the results for investors. There are reasons for the marriage between the two companies. AT&T wants to use Time Warner’s movies and shows to expand its bundling strategy. It wants to combine wireless service with access to content as a way to convince consumers to buy its phones and devices.
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In a statement, Time Warner CEO Jeff Bewkes expressed optimism that the union with AT&T would power future growth, predicting that it will help the company thrive in an era when customers are turning to mobile devices to stream videos.
“Our results and these highlights reflect our continued focus on executing our strategy, which includes both creating the most engaging content and advancing the ways that consumers can enjoy and experience our content and brands across platforms,” said Bewkes. “The ability to accelerate our pace of innovation and connect more directly with consumers are among the reasons we are excited about our proposed merger with AT&T.”
Warner Bros. had a robust quarter despite the fact that industry-wide box office results were down dramatically as summer came to a close, falling 14% to the eke out the worst domestic numbers in three years. Despite the choppy waters, the film division benefited from hit films such as Christopher Nolan’s World War II epic “Dunkirk,” the horror thriller “It,” and a sequel to “Annabelle,” its killer doll franchise. Revenues at the division increased 2% to $3.5 billion, while adjusted operating income rose 33% to $576 million. The company’s video game unit scored with “Injustice 2,” a comic book-infused game featuring Justice League characters. Television licensing revenues were down, however.
Turner, the division that boasts CNN, TNT, and TBS in its portfolio of brands, saw revenues jump 6% to $2.8 billion and adjusted operating income increase 5% to $1.3 billion on higher subscription results. It also enjoyed strong ratings for Adult Swim’s “Rick and Morty” and for CNN, which drove a thirst for Trump-related drama to its best-ever third quarter. The bad news was that advertising revenues dropped 3% during the quarter.
HBO got a boost from the return of “Game of Thrones,” with viewers tuning into the latest developments in Westeros in record numbers. Revenues at the pay-TV service increased 13% to $1.6 billion, while operating income rose 7% to $565 million.
Shares of Time Warner closed Wednesday down 1.77% at $98.72.
