What To Expect From Time Warner’s Q2 Earnings

Time Warner (NASDAQ: TWX) is scheduled to announce its fiscal second quarter results on Wednesday, August 2. The company reported better-than-expected Q1 results, as both its earnings and revenue beat analysts’ estimates. The company’s revenue increased 6% year-over-year (y-o-y) to $7.7 billion, which beat consensus estimates by $70 million. This increase was primarily driven by growth across divisions, particularly HBO, as well as the cable TV and film businesses. Time Warner’s adjusted operating income grew 7% y-o-y to $2.1 billion, and it also posted adjusted earnings of $1.66 per share, which was an 11% y-o-y increase.

However, Time Warner is expected to continue investing in new digital initiatives, including the Boomerang branded SVOD service, and in marketing to support upcoming original programming (such as season two of Animal Kingdom). Accordingly, the company expects its operating income to decline in the second quarter. Also, the new NBA deal will likely have a significant impact on programming costs in the second quarter. At HBO, management expects subscription revenue growth to accelerate into high single digits in the second quarter, based on the healthy growth of OTT products and solid international trends. Meanwhile, at Warner Bros., the company expects growth led by its theatrical and video game businesses, primarily driven by the success of Wonder Woman.

On the AT&T (NYSE:T) and Time Warner merger, the odds appear to be increasingly favorable, since the transaction structure is likely to avoid the transfer of broadcast licenses, which should reduce regulatory scrutiny. Accordingly, both companies have been positive about obtaining the requisite approval, indicating that they expect the deal to close by the end of 2017.

CNN Saw The Most Watched Q2 Ever In Total Day Slot

CNN saw solid ratings growth in June, as it witnessed the most-watched second quarter ever among both adults 25-54 and total viewers. In addition, the network also delivered its largest average prime time audience for any second quarter since 2003, in both total viewers and among 25-54 group. For the quarter ending June, the network grew 10% y-0-y in total prime time viewers and 19% y-o-y in the 25-54 demographic. This could help boost the company’s advertising income in the second quarter.

Solid  Studio Performance In Q2

Warner Bros. collected $505 million at the U.S. box office during the June quarter, primarily led by the success of Wonder Woman, which has grossed nearly $400 million at the domestic box office against a production budget of $149 million. The studio’s performance was strong in Q2 2017 as compared to the prior year quarter, which should help boost earnings.

Reuters’ compiled analyst estimates forecast revenues of $7.30 billion and earnings of $1.19 per share for Q2 2017, implying growth of about 5% and (8%), respectively.

Have more questions on Time Warner? Please refer to our complete analysis for Time Warner

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