Time Warner, the owner of Warner Bros, Turner Broadcasting and Time, has reported a 10 per cent rise in revenue for the quarter that ended in June — its highest growth rate since 2007 — and slightly revised upward its earnings guidance for the year. The company’s total revenues were $7.03 billion, up from $6.38 billion in the same quarter last year.
Jeff Bewkes, the chairman and chief executive of Time Warner, told analysts that cable advertising and subscription revenues remained strong. He said the company benefited in the second quarter from the release of the hit film “The Hangover Part II” and from sales of HBO shows like “True Blood” and video games like “Mortal Kombat 9.”
Recognising that creating new franchises costs money, Time Warner’s margins were somewhat affected by investments in content rights for the NCAA basketball tournament and in start-up costs for HBO GO. “These investments both set us up for accelerated earnings growth in the second half of this year and further strengthen our long-term growth prospects,” John Martin, the company’s chief financial officer explained during a conference call.
Bewkes cited HBO GO as an example of Time Warner’s efforts to refashion itself for customers who want content digitally. Earlier this year, HBO, which has historically been a profit centre for Time Warner, rolled out HBO GO as a free extension for subscribers of the premium cable channel, allowing them to watch virtually every HBO show and feature film via the Internet.
Bewkes said the extension had been “an even bigger hit than we expected,” with nearly four million downloads of the HBO GO mobile app since May. “Our research shows that 85 percent of GO users are watching much more HBO than they did before,” he said. Later in the year, HBO hopes to extend the service to some Internet-connected television sets and video game consoles.