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Time Warner Increases Q4 Dividend; HBO, Turner Gains Offset by Warner Bros. Revenue Slip

”Tammy“ and ”Edge of Tomorrow“ can’t compete with 2013’s fourth quarter home entertainment releases

Time Warner released its Q4 2014 earnings on Wednesday before the U.S. stock markets opened, reporting earnings per share (EPS) of $0.84 on $7.53 billion in revenue. Adjusted EPS was $0.98.

Wall Street analysts had forecasted EPS of $0.94 on $7.55 billion in revenue, according to Yahoo FinanceZacks had the per-share earnings estimated at a penny more. CNN Money saw it one penny in the other direction, anticipating EPS of $0.93 on $7.5 billion in sales. Analyst estimates typically exclude special items, therefore Time Warner technically topped earnings forecasts by four cents but missed the consensus on revenue.

Net income for the most recent three-month period was $718 million. That is down from 2013’s Q4 net income of $983 million.

Turner’s two-percent revenue growth — mainly from subscription increases — was partially offset by a one-percent decline from advertising. HBO’s revenue grew six percent, mainly thanks to similar subscriber gains. Warner Bros. revenue declines offset both, mostly due to a decrease in home entertainment and videogames. “Tammy” and “Edge of Tomorrow” could not compete with 2013’s Q4, which boasted home releases of “Man of Steel,” “Pacific Rim” and “The Hangover Part III.”

“Batman: Arkham Origins” was the big video game in the same three-month period last year.

For the comparable fourth quarter of 2013, Time Warner had reported adjusted EPS of $1.07.

Last quarter, 2014’s Q3, was a nice surprise for company shareholders. At the time, CEO Jeff Bewkes had credited HBO, Turner Broadcasting and comic book adaptations — Fox’s “Gotham” and CW’s “The Flash,” for example — for the successful three-month period. Ratings for both shows have since gone down, as have Nielsen numbers for the company’s TBS and TNT.

That said, Turner and HBO subscriptions have both seen an uptick recently, helping to offset the negative impact from dwindling ratings.

On the film side, “The Hobbit: The Battle of the Five Armies” opened during Q4 2014, a boon to Time Warner’s Warner Bros. for sure, though the movie brought in less money during the quarter than last year’s “The Hobbit: The Desolation of Smaug.”

However, “Five Armies” is expected to eventually pass “Smaug” and top $1 billion worldwide.

Commenting on his company’s reported numbers for the full fiscal year, Chairman and CEO Jeff Bewkes (pictured above) stated: “We had another very successful year in 2014, with solid revenue growth and robust 18 percent adjusted EPS growth — our sixth consecutive year of at least high-teens adjusted EPS growth. Our financial performance reflects the strength of our position as the world’s leading video content company.”

“For the year, three of Turner’s networks — TBS, TNT and Adult Swim — ranked among ad-supported cable’s Top 10 networks in primetime among adults 18-49,” he continued. “TNT was home to six of the top 15 original series on ad-supported cable in 2014, more than any other network, including the three most watched new series, ‘The Last Ship,’ ‘The Librarians,’ and ‘Murder in the First.’ CNN strengthened its programming and in 2014 had an average total-day monthly reach of almost 77 million total viewers, the highest of any cable news network.”

Bewkes concluded, “Last year we also returned $6.6 billion to shareholders through share repurchases and dividends. We’re committed to building on our strong record of providing direct returns to shareholders, evidenced by the 10-percent increase in our dividend approved by our Board, which is the sixth straight year we’ve raised the dividend by double-digits.”

On Tuesday, a day before it released Q4’s financials, Time Warner stock (TWX) closed at $80.76 per share.

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