Time Warner Inc.
) posted fourth-quarter 2013 earnings of $1.17 per share that
surpassed the Zacks Consensus Estimate by a couple of cents and
came a penny ahead of the prior-year quarter, reflecting
strength across Turner, Home Box Office (HBO) and Warner
Bros. coupled with lower shares outstanding.
However, including one-time items, quarterly earnings came in
at $1.06 per share, down 7.8% from $1.15 earned in the year-ago
This Zacks Rank #3 (Hold) stock now anticipates low
double-digit growth in earnings per share for 2014, after taking
into account the divestiture of Time Inc., which is expected to
conclude in the second quarter of 2014.
Time Warner's total revenue of $8,565 million jumped 5%
year-over-year, and surpassed the Zacks Consensus Estimate of
$8,382 million. The company's investments in content and
technology in the recent years have boded well.
Adjusted operating income declined 2% to reach $1,942 million,
whereas adjusted operating margin contracted 160 basis points to
In a strategic move to unlock the value of its core business
activities, Time Warner decided to go ahead with its plan to spin
off Time Inc. magazine into a separate, publicly traded company.
The move to shed Time Inc. followed the negotiation between Time
) to create a magazine based company, which eventually did not
materialize. Excluding Time Inc., revenue grew 6%, while adjusted
operating income edged down 1%.
The decision would facilitate Time Warner to concentrate
purely on television networks and film and TV production
businesses. The decision would be accretive to the shareholders
of Time Warner in the same fashion, when this diversified media
Time Warner Cable Inc.
) into independent companies.
division's revenue rose 3% to $2,548 million, driven by growth of
6% in subscription revenue and 1% in advertising revenue.
Adjusted operating income for the segment dropped 3% to $879
million attributable to higher programming and marketing
Higher subscription revenue was primarily attributed to rise
in domestic rates and international growth. Advertising revenue
gained due to growth witnessed at Turner's domestic entertainment
networks on account of rise in pricing and robust demand, partly
offset by decline witnessed across domestic news networks.
segment revenue grew 6% to $1,260 million driven by growth of 8%
in subscription revenue, partly offset by 9% decline in Content
revenue. Higher subscription revenue was primarily attributed
rise in domestic rates and the merger of HBO Asia and HBO Nordic.
On the contrary, Content revenue fell on account of fall in home
video revenue, partially offset by increase in international
Adjusted operating income for the division tumbled 4% to $414
million principally attributable rise in expenses, primarily
higher programming costs.
revenue jumped 7% to $3,996 million resulting from sturdy
theatrical and videogames slates, partly offset by decrease in
television licensing revenue and fall in physical home video
revenue. Adjusted operating income for the division rose 4% to
$576 million on account of increased revenue, partly offset by
rise in print and advertising costs.
revenue remained almost flat at $966 million due to 6% decline in
Subscription revenue, offset by 2% jump in advertising revenue
and 6% increase in Other revenue. The segment adjusted operating
income plunged 14% to $173 million.
Other Financial Aspects
Time Warner ended the quarter with cash and cash equivalents
of $1,862 million, long-term debt of $20,099 million and
shareholders' equity of $29,904 million.
During the quarter, Time Warner incurred capital expenditures
of $287 million and generated free cash flow of $628 million.
From Jan 1, 2013 through Jan 31, 2014, the company bought back
about 64 million shares, aggregating approximately $3.9 billion.
The company's board in Jan 2014 authorized a share repurchase
program of $5 billion. The company also hiked its quarterly
dividend by 10% to 31.75 cents.
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