Time Warner Inc reveals financials of premium movie network HBO
06 Feb 2014
Time Warner Inc revealed the financials of its premium movie network HBO yesterday for the first time, to give a better picture of how the unit stacked up against video streaming service Netflix.
Netflix was one of the best performing stocks last year and analysts said Time Warner wanted more recognition from investors for the strength of HBO and its streaming product, HBO Go, which had a similar feel to Netflix.
The effort to highlight the digital aspect of its business came with the company preparing to spin off its slow-growth magazine publishing business Time Inc.
Retuers quoted Gabelli & Co analyst Brett Harriss as saying, perhaps Wall Street needed to put a higher multiple on the HBO business.
Harriss added it was the largest potential competitor to Netflix, which was trading at such a high multiple, adding, the performance of HBO last year was in line with his estimates.
HBO, which said its adjusted operated income increased 8 per cent to $1.7 billion, was much more profitable than Netflix, but it had also been around much longer and was growing more slowly.
The revenue of the company rose 4 per cent to $4.9 billion, as against the revenue of Netflix which was up 21 per cent last year at $4.37 billion.
According to Time Warner chief executive Jeff Bewkes, HBO recorded its biggest gain in domestic subscribers in 17 years, about 2 million last year, a figure that included subscribers for HBO's sister channel Cinemax.
However, not all assets of TWI received commendation from the executive, in an earnings conference call yesterday. According to Bewkes, TNT had hit a "soft patch" and would require more investment and TruTV had suffered ratings declines and even as CNN had passed MSNBC, there was still a lot of work to be done.
Bewkes also said during the call, that Warner Bros had record-setting profits in the past year. He added, this was a banner year and Warner Bros was leading the industry by any measure.
Bewkes added that the studio had crossed $5 billion in revenue for the first time, thanks to box office prowess of films like Gravity, Man of Steel and the latest Hobbit films.
The movies which were especially popular overseas, took in $3 billion collectively. Operating income rose 7 per cent to $1.3 billion.
