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Time Warner Gets Help from Box Office, CNN as Earnings Top Estimates

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Time Warner Inc. posted a solid fourth-quarter thanks in part to big box office numbers from Warner Bros., Turner’s great ratings, and jumps in HBO NOW subscriptions. The big quarter comes ahead of its still up in the air merger with AT&T (T - Free Report) .

Time Warner is up $0.41% to $96.61 in late-afternoon trading Wednesday. It is currently a Zacks Rank #2 (BUY).

The media giant posted fourth-quarter 2016 earnings of $1.25 per share, surpassing the Zacks Consensus Estimate of $1.19. Time Warner’s fourth-quarter revenue was $7.89 billion, beating our consensus estimate of $7.75 billion and rising 11% year-over-year. Total 2016 revenue increased 4% to $29.3 billion.

Fourth-quarter net income declined to $293 million from $857 million a year ago, which it attributed to the $1 billion paid on premiums and debt repurchases.

Turner’s full-year revenue rose 7% to $11.4 billion, bolstered by CNN’s presidential election coverage. Warner Bros. studio posted its second-best year ever at the global box office. HBO Now subscriptions are up to two million, as Westworld became the premium cable giant’s most-watched first year series in its history.

Warner Bros. and Turner are set to have another big year.

Warner Bros. has major blockbusters in the 2017 pipeline, including Kong: Skull Island, Wonder Woman, Dunkirk, and Blade Runner 2049. CNN was the top ranked news network and the fastest growing top-30 cable network in 2016, and its constant coverage of President Donald Trump is unlikely to slow during his first year in office.

AT&T’s $85 billion merger with Time Warner is far from a done deal, as Trump opposed its bid for Time Warner during this election campaign. And the president early on has seemed to try to keep his word regarding campaign promises. But, AT&T is pushing its weight and money around Washington, D.C. in order to assure the deal goes through.

Time Warner CEO Jeff Bewkes showed his confidence in his company even if the merger is shutdown. “We don’t need to do a merger with anyone,” Bewkes told Variety.

“We don’t have to acquire any other company. We’re big enough to continue on the independent course we’ve been on. We just think AT&T’s capabilities accelerate and enhance the course we’re on. And we think we’ll have a much bigger effect if we are together.”

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