Time Warner posts strong results in the wake of AT&T deal
Time Warner boosted its outlook for the year on the back of the news it will be bought by AT&T in a deal announced last week for $85bn (£69bn).
The media giant said revenue and operating income were up in its cable TV and film businesses. These were above expectations from Wall Street and show why the telecom company AT&T was willing to pay such a high price for the firm – 36 per cent above the trading stock at the time.
The results
Revenues increased nine per cent to $7.2bn, operating income grew ten per cent to $2bn and earnings per share were up 48 per cent to $1.87.
This year the company also repurchased around 30 million shares for the value of around $2.3bn.
Why it's interesting
Last week AT&T reached a deal to buy Time Warner for $85.4bn. It agreed to pay $107.50 per share in a split cash and stock deal.
However, there are concerns that the deal may not pass with government regulators.
Time Warner, who owns CNN, HBO and Warner Bros, is taking a bold bet on the future of mobile video, which could lead to large financial benefits for AT&T. The merged company will be a competitive alternative to other TV and video providers – and they can push new video content through on mobile streaming service Hulu, which they will also have a slice of.
What the company said
Chairman and Chief Executive Officer Jeff Bewkes said: “We had a strong third quarter, which keeps us on track to exceed our original 2016 outlook and underscores our leadership in creating and distributing the very best content. In television, HBO took home more Primetime Emmy Awards than any other network for the 15th consecutive year and Time Warner’s divisions won a total of 40 Emmys, more than any other company.
"CNN’s standout election coverage made it the #1 news network in primetime among adults 18-49 for the fourth consecutive quarter and Turner’s momentum doesn’t stop there. Year-to-date, TBS, TNT and Adult Swim are three of the top five ad-supported cable networks in primetime among adults 18-49. In film, Warner Bros. had a strong quarter led by Suicide Squad and has the #1 release of the fall in Sully, while anticipation is off the charts for J.K. Rowling’s Fantastic Beasts and Where to Find Them, which hits the big screen on November 18.”
The agreement we announced on October 22 to be acquired by AT&T Inc. represents a great outcome for our shareholders and an excellent opportunity to drive long-term value well into the future. Combining with AT&T is the natural next step in the evolution of our business and allows us to significantly accelerate our most important strategies.