In what could be its final earnings report as an independent company, “Wonder Woman” and a double-digit increase in cable subscription revenue helped Time Warner deliver a strong second quarter as it prepares to become part of AT&T.
Before markets opened Wednesday, Time Warner reported revenue of $7.3 billion and earnings of $1.33 a share for the three months ended June 30. That compares with the $7 billion in revenue and earnings of $1.29 a share the company brought in during the corresponding period last year. Analysts estimated Time Warner would report revenue of $7.3 billion and earnings of $1.19 a share on average.
“We’re very pleased with our first-half results, which keep us on track to achieve our objectives for the year,” Time Warner Chairman and CEO Jeff Bewkes said in a statement accompanying the earnings release. “Our performance is a result of the continued successful execution of our strategic objectives – with the strong Subscription revenue growth at Home Box Office and Turner a great example of this – along with the investments we’re making in our brands and high-quality video content. Warner Bros. is home to the biggest cinematic hit of the summer so far with ‘Wonder Woman,’ which has grossed approximately $800 million at the global box office to date, and dazzled audiences again last month with the critically acclaimed ‘Dunkirk.’”
While the strong earnings performance is nice, Time Warner has recently been focused on its final preparations as it gets ready to be absorbed by AT&T, which agreed to buy the company in an $85 billion deal in October that will unite the Warner Bros. studio, HBO, CNN, TNT, TBS, DirecTV and AT&T’s wireless business under the same roof, creating a content and distribution colossus.
Bloomberg reported in July that AT&T and Time Warner executives have been meeting with antitrust officials to hammer out possible conditions that could get the deal across the finish line, as the transaction requires approval from the Justice Department. And last week, AT&T announced that exec John Stankey would become CEO of its new media group, which will include the Time Warner properties. Stankey will work with Bewkes during the transition.
“We continue to expect the Time Warner deal to close by year-end and further transform the company,” AT&T CEO Randall Stephenson said during AT&T’s second-quarter earnings call last month.
Even though the second-quarter box office shrank compared to last year, Time Warner’s Warner Bros. studio thrived, with its DC Comics film “Wonder Woman” starring Gal Gadot fighting its way to nearly $800 million worldwide. And that momentum looks likely to continue, as Christopher Nolan’s “Dunkirk,” which came out July 21, has already hauled in $236 million globally. And on the TV side, CNN continues to enjoy strong ratings chronicling the drama of the Trump administration, and HBO got a boost ahead of a new season of “Game of Thrones,” which premiered last month. Subscription revenue as a whole surged 13 percent in the second quarter year-over-year. Time Warner also reaffirmed its guidance for the second half of the year, projecting higher HBO revenues in the third and fourth quarters due to a slate of original series coming online, and a big fourth quarter for Warner Bros. as “Justice League” hits theaters late in the year.
Time Warner will not hold a conference call to discuss the earnings due to the pending merger.