Time Warner on Thursday reported a strong third-quarter of 2017, despite facing pay-TV and box office headwinds. The company overcame those obstacles with hits like “It,” a later-than-usual “Game of Thrones” finale, and strong Nielsen ratings among millennials for “Rick & Morty.”
All eyes have been on the HBO, Turner, and Warner Bros. parent’s imminent acquisition by AT&T, which has not yet closed despite being announced more than one year ago. Executives still expect that to go down by the end of 2017.
Before markets opened on Thursday, Time Warner reported revenue of $7.6 billion and adjusted earnings of $1.82 a share for the three months ended September 30. That compares with the $7.17 billion in revenue and earnings of $1.83 a share the company brought in during the corresponding period last year.
This time around, analysts estimated Time Warner would report revenue of $7.39 billion and earnings of $1.59 a share, on average, so the company beat both handily.
Time Warner’s TV business had another solid quarter, as its premium Home Box Office cable channel was able to add digital subscribers (and pick up a few Emmys). HBO revenue jumped 13 percent with that sub growth and some content money coming in. Turner’s revenue rose 6 percent despite a 3 percent decline in ad sales.
And although the total box office slumped, Warner Bros. thrived, as the studio released the critically acclaimed Christopher Nolan World War II epic “Dunkirk” in July, which went on to gross more than $520 million worldwide.
Warner Bros.’ New Line division followed that success with September’s Stephen King adaptation “It,” which set numerous September box office records on its way to more than $650 million globally.
Those two theatrical hits have helped Warner Bros. rank first of all studios year-to-date, with 20 percent market share through October 22.
Here is some of what chairman and CEO Jeff Bewkes said in Thursday’s earnings report:
We delivered very strong third-quarter results, keeping us on track to achieve our objectives for 2017. Both Turner and Home Box Office achieved double-digit gains in Subscription revenues, including HBO’s highest quarterly growth in 13 years, while Warner Bros. had a terrific quarter in theatrical, which all contributed to us increasing Operating Income by 11 percent and Adjusted Operating Income by 13 percent.
Home Box Office’s creative excellence was again recognized at the Primetime Emmy Awards where HBO received more Primetime Emmys than any other network for the 16th consecutive year. The seventh season of ‘Game of Thrones’ concluded during the quarter with an average of 33 million viewers, a record for an HBO original series.
All of that sounds great, right? However, as President Donald Trump continues to feud with Time Warner’s CNN and its president, Jeff Zucker, some investors are concerned politics could hold up the $85 billion mega-merger.
John Stankey, currently the CEO of AT&T Entertainment Group, will take over the Time Warner entertainment companies after the merger is complete. While that’s led to some speculation about potential turnover involving current top-level Warner Bros. execs, AT&T has not provided further detail.
Due to the impending transaction, Time Warner will not hold a conference call to discuss the earnings.