Time Warner reported lower Q2 net income as programming costs rose and movie revenue declined. Net income fell to $952 million (€851.9m) from $971 million, or $1.18 per share, a year ago. Revenues fell 5 per cent to $7 billion.
“We had a strong first half of 2016, which puts us ahead of our original goals for the year. Our performance reflects the creative excellence resulting from investments we’ve been making in the very best content. At the same time, we’re capitalising on new distribution opportunities to take advantage of the growing demand for high-quality video content around the world,” said CEO Jeff Bewkes.
Bewkes pointed to Time Warner’s purchase of a 10 per cent stake in Hulu as an example of how the company was committed to providing content to consumers across a variety of platforms.
Q2 net income was above Wall Street expectations, but revenue was less than expected. Operating income at Turner Broadcasting was flat at $1.1 billion. Programming costs were up 11 per cent because of higher spending on sports and original programming.
At HBO, operating income fell 5 per cent to $481 million. Expenses were higher because of increased programming, restructuring and severance costs. Programming costs were up 6 per cent. Amortisation was lower because HBO is using its older programming longer than expected. Revenues were up 2 per cent to $1.5 billion as subscription revenues rose 6 per cent. Content revenues were down 17 per cent.