Time Warner reported solid first quarter performance on April 29. The company recorded $7.1 billion in revenue for the period and adjusted earnings per share of $1.19. Sales were up 12% year over year, while adjusted EPS increased roughly 23%.
Following the quarterly results, key Time Warner officials participated in a conference call to discuss the quarter's results and the overall business. Here are five key takeaways from the call.
Turner performed well and has assets for continued success
Strong performance from Time Warner's Turner networks segment elevated results for the first quarter, with the segment's quarterly revenue rising 5% from the prior year and adjusted operating income up by 26%. Great performance for NCAA tournament basketball helped generate double-digit ad growth on Turner networks.
Here's Time Warner Chairman and CEO Jeff Bewkes on the great results of the NCAA Tournament, expected strength from NBA playoff coverage, and the performance of original programing:
Bewkes continued discussing the importance of original programming, stating that Time Warner has eight new series set to debut this year on TBS and TNT, and pointing to the successes of Adult Swim and Cartoon Network. In Q1, Cartoon Network claimed 9 of the top 10 cable telecasts among boys aged 6 to 11, with 22% viewership growth among this demographic. It was also the number one network overall for VOD content.
Time Warner also saw solid first quarter performance from its CNN and HLN news networks. Total day viewership rose 20% and 33% for CNN and HLN, respectively, among adults 25-54.
HBO is strong and has high-quality content in the pipeline
Time Warner has done an admirable job of keeping its premium HBO service at the forefront of television entertainment, and company management devoted ample time in the conference call to highlight the platform's strength.
First-quarter revenue from the HBO segment grew roughly 4% year over year to reach approximately $1.4 billion. The service gained subscribers, but the majority of the revenue increase was related to increased subscription prices. CEO Jeff Bewkes touted the company's strength in documentary films with titles like Going Clear and The Jinx , while also pointing to the the strong cultural pulls of its episodic lineup. Here's Bewkes on what HBO has to offer this year:
Time Warner sees big potential in HBO Now and new distribution models
While cord-cutting continues to pose a potential threat to network and media companies like Time Warner, it also creates new opportunities to expand the audience base. Here's HBO CEO Richard Plepler on what the company's recently launched HBO Now service could do for the reach of the broader platform and the company at large:
The company indicates that HBO Now has gotten off to a strong start in terms of both subscriber numbers and usage. During the question and answer portion of the call, Bewkes mentioned that the company viewed Apple as a long-term partner in television. Following Bewkes' comment, Turner CEO John Martin pointed to recent deals with DISH Network 's Sling and Sony as part of a broader push to establish relationships with multichannel video programming distributors and stated that new deals with other MVPDs were likely to follow.
Operating income and EPS growth will slow in Q2, but future looks strong
During the call, CFO Howard Averill reaffirmed the company's targets for fiscal 2015, stating that Time Warner would deliver annual earnings per share of between $4.60 and $4.70. The commitment to its earnings target comes even as the company expects greater headwinds from unfavorable foreign currency exchange rates. Here's Averill explaining why the company's second quarter in fiscal 2015 likely won't be as impressive as the first:
Despite predictions that the current fiscal period will have some bumps, Averill was adamant that Time Warner is on track for a solid year of EPS growth. Last year's adjusted EPS came in at $4.15, so hitting the bottom end of Time Warner's earnings target would equal roughly 11% growth.
Net debt increased due to focus on returning value to shareholders Time Warner is in the midst of a big push to return cash to investors. Last quarter, it returned approximately $1.2 billion to shareholders in the form of share repurchases and dividend payouts, and Time Warner had $3.4 billion remaining of an initial $7 billion share repurchase authorization as of April 24. The focus on generating value for investors pushed the company's net debt up $330 million to roughly $20.2 billion. Here's CFO Howard Averill on the company's financial leverage and target for the rest of the year:
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The article 5 Things Time Warner Inc. Management Wants You to Know originally appeared on Fool.com.
Keith Noonan has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Apple. The Motley Fool owns shares of Amazon.com and Apple. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
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