Time Warner Inc.’s TWX initiatives such as expansion into new markets and digital endeavors have been boosting its operating performance. This is quite evident from the company’s positive earnings surprise streak in the last 15 quarters. In third-quarter 2015, the company beat the Zacks Consensus Estimate for earnings by 14.7% on the strength of its Warner Bros. and Home Box Office (HBO) businesses. The company's investments in video content and technology continued to yield results.
Time Warner’s significant international presence has helped to broaden its client base and product portfolio. The company operates in the United Kingdom, Germany, Canada, France, Japan and other countries apart from the United States. We believe that its strong international exposure will drive growth in the coming quarters.
Per the Wall Street Journal, video-streaming service provider Hulu is in talks with Time Warner to sell a stake to the latter. The deal is expected to be valued at over $5 billion. However, Time Warner declined to comment on the matter. If the deal goes through, Time Warner will be the fourth media company to hold a stake in Hulu along with The Walt Disney Company DIS, Twenty-First Century Fox, Inc. FOXA and Comcast Corporation CMCSA. If Time Warner manages to strike a deal, then each company will hold a 25% stake in Hulu.
On the flip side, revenues from the company’s Turner division declined 2% to $2,398 million due to a 15% fall in content and other revenues. Also, a 1% dip in subscription revenues as well as advertising revenues affected results. Subscription revenues decreased due to unfavorable foreign exchange rates and a drop in domestic subscribers, partially offset by a rise in domestic rates and local currency growth at Turner's international networks. Advertising revenues fell on account of unfavorable foreign exchange rates and the absence of NASCAR programming, partly offset by local currency growth at Turner’s international networks. Domestic advertising remained flat in the last reported quarter.
Time Warner currently has a Zacks Rank #3 (Hold).
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