Time Warner Tops Q4 Earnings Estimates, Misses On Revenue

Time Warner Inc. (TWX - Analyst Report) posted fourth-quarter 2014 adjusted earnings of 98 cents a share that surpassed the Zacks Consensus Estimate of 94 cents, reflecting strength across Turner and Home Box Office (“HBO”). The company's investments in video content and technology continued to show results. However, earnings per share of this Zacks Rank #3 (Hold) stock fell 8% year over year. Soft performance at Warner Bros. hurt the results to some extent.

Management now expects adjusted earnings per share for 2015 between $4.60 and $4.70. The current Zacks Consensus Estimate for 2015 is $4.68 per share.

Including one-time items the quarterly earnings came in at 84 cents a share, substantially down from $1.06 in the prior-year quarter.

Time Warner's total revenue of $7,525 million fell marginally by 1% year over year and also came below the Zacks Consensus Estimate of $7,540 million.

Adjusted operating income tumbled 10% to reach $1,596 million due to restructuring and severance costs witnessed across all divisions as well as charges associated with the stopped airing of certain Turner programming.

Time Warner has taken restructuring aggressively. The company is now focusing on original programming, reducing costs and increasing investments in key areas to enhance profitability. In a strategic move to unlock the value of its core business activities, Time Warner spun off its magazine division into a separate, publicly traded company, Time Inc. (TIME - Snapshot Report). Time Warner had earlier divested Time Warner Cable Inc. (TWC - Analyst Report) and AOL Inc. (AOL -Snapshot Report) into independent companies. The company now concentrates purely on television networks and film and TV production businesses.

Segment Details

Turner division's revenues rose 2% to $2,607 million, driven by growth of 5% in subscription revenues and 3% in content revenues, partially offset by 1% decrease in advertising revenues. Higher subscription revenues were primarily attributed to a rise in domestic rates and international growth. Advertising revenues declined due to fall at Turner's domestic entertainment networks.

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