How Sensitive Is Time Warner’s Stock Price To Number Of U.S. HBO Subscribers?

TWX: Time Warner logo
TWX
Time Warner

HBO accounts for 35% of the valuation of Time Warner Inc (NASDAQ: TWX). HBO drives majority of its revenues from US subscribers. It charges more than $7 per month as affiliate fee per subscriber which is the highest among all channels. We believe the affiliation fee will grow at an average rate of 3% over each year.  However, the growth rate of number of U.S. subscribers is highly volatile, considering the large amount of cord-cutting in U.S. As per our current estimates, the sensitivity of TWX stock price to 1% change in growth rate of number of U.S. subscribers is 1%.

twx-scenario-hbo

 

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Have more questions about Time Warner? See the links below.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Time Warner

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