SEC Filings

10-Q
TIME WARNER INC. filed this Form 10-Q on 10/26/2017
Entire Document
 


Table of Contents

TIME WARNER INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)

 

Revenues.  The components of Revenues are as follows (millions):

 

     Three Months Ended September 30,   Nine Months Ended September 30,
     2017      2016      % Change   2017      2016      % Change

Turner

   $             2,768       $             2,610               6%           $ 8,958       $ 8,526       5%

Home Box Office

     1,605         1,426       13%     4,649         4,399       6%

Warner Bros.

     3,460         3,402       2%     9,813         9,169       7%

Intersegment eliminations

     (238)        (271)      (12)%     (760)        (667)              14%        
  

 

 

    

 

 

      

 

 

    

 

 

    

Total revenues

   $ 7,595       $ 7,167       6%   $             22,660       $             21,427       6%
  

 

 

    

 

 

      

 

 

    

 

 

    

For the three and nine months ended September 30, 2017, Revenues at the Turner and Home Box Office segments increased primarily driven by higher Subscription revenues, and Revenues at the Warner Bros. segment increased primarily driven by higher Theatrical product and Videogames and other revenues, which, for the three months ended September 30, 2017, was partially offset by lower Television product revenues. Each of the revenue categories is discussed in greater detail by segment in “Business Segment Results.”

Costs of Revenues.  Costs of revenues were $3.928 billion and $12.466 billion for the three and nine months ended September 30, 2017, respectively, and $3.873 billion and $11.718 billion for the three and nine months ended September 30, 2016, respectively. The increase in Costs of revenues for the three months ended September 30, 2017 primarily reflected higher programming expenses at the Turner and Home Box Office segments, partially offset by lower print and advertising costs at the Warner Bros. segment. The increase in Costs of revenues for the nine months ended September 30, 2017 primarily reflected higher film and television production costs at the Warner Bros. segment and higher programming expenses at the Turner segment. The segment variations are discussed in “Business Segment Results.”

Selling, General and Administrative Expenses.  For the three and nine months ended September 30, 2017, Selling, general and administrative expenses increased 17% and 11%, respectively, to $1.378 billion and $4.080 billion, respectively, from $1.179 billion and $3.688 billion for the three and nine months ended September 30, 2016, respectively, primarily reflecting higher AT&T merger costs at all segments and higher marketing expense at the Turner and Home Box Office segments. For the three and nine months ended September 30, 2017, Selling, general and administrative expenses included $90 million and $268 million, respectively, of costs related to the AT&T merger. The segment variations are discussed in “Business Segment Results.”

Included in Costs of revenues and Selling, general and administrative expenses is depreciation expense of $124 million and $367 million for the three and nine months ended September 30, 2017, respectively, and $118 million and $359 million for the three and nine months ended September 30, 2016, respectively.

Amortization Expense.  Amortization expense was $45 million and $136 million for the three and nine months ended September 30, 2017, respectively, and $48 million and $143 million for the three and nine months ended September 30, 2016, respectively.

Restructuring and Severance Costs.  For the three and nine months ended September 30, 2017 and 2016, the Company incurred Restructuring and severance costs primarily related to employee terminations and other exit activities. Restructuring and severance costs are as follows (millions):

 

     Three Months Ended September 30,      Nine Months Ended September 30,  
     2017      2016      2017      2016  

Turner

   $                   1       $      $      $ 15   

Home Box Office

            —                41   

Warner Bros.

     (1)                       

Corporate

                           
  

 

 

    

 

 

    

 

 

    

 

 

 

Total restructuring and severance costs

   $      $                   11       $                   23       $                   64   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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