Time Warner First-Quarter Earnings Rise as 'The Lego Movie' Helps Boost Film Results

Time Warner CEO Jeff Bewkes

The entertainment conglomerate, led by CEO Jeff Bewkes, is planning to spin off its Time Inc. magazine unit later this quarter and has benefited from the success of "The Lego Movie."

Time Warner on Wednesday reported first-quarter earnings that rose compared with the year-ago period.

The entertainment conglomerate, led by CEO Jeff Bewkes, posted strong financials for its film unit, which benefited from the box-office success of The Lego Movie, 300: Rise of an Empire and The Hobbit: The Desolation of Smaug, with HBO also reporting better results.

The Turner networks, meanwhile, saw ratings weakness in the first quarter, but advertising revenue still rose.

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Time Warner is planning to spin off its Time Inc. magazine unit later this quarter.

Earnings rose from $754 million to $1.29 billion. Adjusted operating earnings climbed 7 percent to $1.5 billion, and revenue rose 9 percent to $7.5 billion. The results exceeded Wall Street expectations. Excluding Time Inc., revenue rose 12 percent, and adjusted operating earnings jumped 12 percent 

Revenue and profitability at the three core units -- the Turner networks, Warner Bros. and HBO -- all rose.

Said Bewkes: "We are off to a very strong start in 2014, with results that demonstrate both the returns we can achieve on our investments in great storytelling and the growth potential of our businesses." 

First-quarter revenue at Warner Bros. jumped 14 percent to $3.1 billion with adjusted operating income up 43 percent to $380 million. Stronger theatrical results, higher video-game revenue and growth in international TV licensing all boosted results, while physical home entertainment revenue declined. 

Bewkes touted The Lego Movie as "yet another franchise for us."

HBO revenue and adjusted operating income rose 9 percent and 11 percent, respectively, to $1.3 billion and $464 million. The latest season of Game of Thrones on home video and subscriber revenue growth boosted revenue, but programming and distribution costs rose. 

Turner revenue grew 5 percent to $2.6 billion as adjusted operating profit rose 3 percent to $895 million. Advertising revenue rose 5 percent, and subscription revenue grew 7 percent, but content revenue dropped 15 percent, with the timing of subscription VOD availabilities cited as a driver of the decline. 

E-mail: Georg.Szalai@THR.com
Twitter: @georgszalai