SEC Filings

10-Q
TIME WARNER INC. filed this Form 10-Q on 08/02/2017
Entire Document
 


Table of Contents

TIME WARNER INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)

 

For the three and six months ended June 30, 2017, programming costs increased mainly due to higher costs for National Basketball Association programming, partially offset by lower costs for NCAA Tournament programming. The increase in other direct operating costs for the three and six months ended June 30, 2017 primarily related to costs associated with digital content and technology initiatives.

For the three and six months ended June 30, 2017, Selling, general and administrative expenses increased primarily due to $28 million and $49 million, respectively, of costs related to the AT&T merger and higher marketing expense of $19 million and $32 million, respectively.

Refer to “Transactions and Other Items Affecting Comparability” for a discussion of Gain (loss) on operating assets, costs related to the AT&T merger and external costs related to mergers, acquisitions and dispositions for the three and six months ended June 30, 2017 and 2016, which affected the comparability of the Turner segment’s results.

Operating Income for the three and six months ended June 30, 2017 decreased due to higher Costs of revenues and Selling, general and administrative expenses, partially offset by higher Revenues and a Gain on operating assets.

Home Box Office.  Revenues and Operating Income of the Home Box Office segment for the three and six months ended June 30, 2017 and 2016 are as follows (millions):

 

                                                                                                                                                     
     Three Months Ended June 30,    Six Months Ended June 30,
     2017   2016     % Change      2017   2016     % Change  

Revenues:

             

Subscription

   $ 1,357     $ 1,253       8%      $ 2,659     $ 2,489       7%  

Content and other

     119       214       (44)%        385       484       (20)%  
  

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

Total revenues

     1,476       1,467       1%        3,044       2,973       2%  

Costs of revenues (a)

     (687     (708     (3)%        (1,446     (1,491     (3)%  

Selling, general and
administrative (a)

     (232     (218     6%        (433     (438     (1)%  

Restructuring and
severance costs

     (3     (37     (92)%        (5     (41     (88)%  

Depreciation

     (20     (20     —%        (39     (38     3%  

Amortization

     (3     (3     —%        (7     (7     —%  
  

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

Operating Income

   $ 531     $ 481       10%      $ 1,114     $ 958       16%  
  

 

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

(a)

Costs of revenues and Selling, general and administrative expenses exclude depreciation.

For the three and six months ended June 30, 2017, Subscription revenues increased due to higher domestic subscription revenues of $90 million and $139 million, respectively, reflecting higher contractual rates and increased subscribers, as well as higher international subscription revenues of $14 million and $31 million, respectively, reflecting growth in Europe.

For the three and six months ended June 30, 2017, Content and other revenues decreased due to lower home entertainment revenues of $39 million and $94 million, respectively, primarily due to the timing of releases and, for the three months ended June 30, 2017, lower licensing revenues of $52 million, which were primarily international.

 

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