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)

 

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

 

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

Revenues:

                 

Subscription

   $ 1,418       $ 1,262       12%    $ 4,077       $ 3,751       9%

Content and other

     187         164       14%      572         648       (12)%
  

 

 

    

 

 

       

 

 

    

 

 

    

Total revenues

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

Costs of revenues (a)

     (758)        (690)      10%      (2,204)        (2,181)      1%

Selling, general and
administrative (a)

     (268)        (185)      45%      (701)        (623)      13%

Restructuring and
severance costs

     (1)        —       NM      (6)        (41)      (85)%

Depreciation

     (22)        (17)      29%      (61)        (55)      11%

Amortization

     (4)        (4)      —%      (11)        (11)      —%
  

 

 

    

 

 

       

 

 

    

 

 

    

Operating Income

   $ 552       $ 530       4%    $ 1,666       $ 1,488       12%
  

 

 

    

 

 

       

 

 

    

 

 

    

 

(a)

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

For the three and nine months ended September 30, 2017, Subscription revenues increased due to higher domestic subscription revenues of $128 million and $267 million, respectively, reflecting increased subscribers and higher contractual rates, as well as higher international subscription revenues of $28 million and $59 million, respectively, reflecting growth in Europe.

For the three months ended September 30, 2017, Content and other revenues increased primarily due to higher international licensing revenues of $12 million and higher home entertainment revenues of $9 million. For the nine months ended September 30, 2017, Content and other revenues decreased due to lower home entertainment revenues, primarily due to the timing of releases.

The components of Costs of revenues for the Home Box Office segment are as follows (millions):

 

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

Programming costs:

                

Originals and sports

   $    288       $      236       22%   $    800       $    824       (3)%

Acquired films and
syndicated series

     265         281       (6)%     816         783       4%
  

 

 

    

 

 

      

 

 

    

 

 

    

Total programming
costs

     553         517       7%     1,616         1,607       1%

Other direct operating
costs

     205         173       18%     588         574       2%
  

 

 

    

 

 

      

 

 

    

 

 

    

Costs of revenues (a)

   $ 758       $ 690       10%   $ 2,204       $ 2,181       1%
  

 

 

    

 

 

      

 

 

    

 

 

    

 

(a)

Costs of revenues exclude depreciation.

The increase in originals and sports programming costs for the three months ended September 30, 2017 was primarily due to the timing of original programming. The decrease in originals and sports programming costs for the nine months ended September 30, 2017 was primarily due to lower original programming charges, partially offset by the timing of original programming. The decrease in acquired films and syndicated series programming costs for the three months ended September 30, 2017 was primarily related to lower acquired programming costs for HBO’s domestic businesses, partially offset by higher acquired

 

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