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)

 

programming costs for HBO’s international businesses. The increase in acquired films and syndicated series programming costs for the nine months ended September 30, 2017 was primarily related to higher acquired programming costs for both HBO’s international and domestic businesses.

For the three and nine months ended September 30, 2017, Selling, general and administrative expenses increased primarily due to higher marketing expenses of $57 million and $51 million, respectively, and costs related to the AT&T merger of $11 million and $35 million, respectively. In addition, the nine months ended September 30, 2016 included $9 million of expenses related to Home Box Office’s withdrawal from a multiemployer benefit plan.

Refer to “Transactions and Other Items Affecting Comparability” for a discussion of costs related to the AT&T merger for the three and nine months ended September 30, 2017, which affected the comparability of the Home Box Office segment’s results.

The results for the nine months ended September 30, 2016 included $41 million of Restructuring and severance costs principally related to executive severance costs.

The increase in Operating Income for the three and nine months ended September 30, 2017 was primarily due to higher Revenues, partially offset by higher Costs of revenues and higher Selling, general and administrative expenses, and for the nine months ended September 30, 2017, lower Restructuring and severance costs.

Warner Bros.  Revenues and Operating Income of the Warner Bros. 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:

                

Theatrical product

   $ 1,697       $ 1,605       6%   $ 4,425       $ 3,926       13%

Television product

     1,308         1,430       (9)%     4,134         4,058       2%

Videogames and
other

     455         367       24%     1,254         1,185       6%
  

 

 

    

 

 

      

 

 

    

 

 

    

Total revenues

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

Costs of revenues (a)

     (2,343)        (2,447)      (4)%     (6,863)        (6,519)      5%

Selling, general and
administrative (a)

     (494)        (436)      13%     (1,442)        (1,309)      10%

Gain on operating
assets

     —              NM            92       (99)%

Asset impairments

     (4)        (5)      (20)%     (6)        (6)      —%

Restructuring and
severance costs

            (1)      NM     (8)        (6)      33%

Depreciation

     (45)        (46)      (2)%     (134)        (142)      (6)%

Amortization

     (37)        (40)      (8)%     (112)        (119)      (6)%
  

 

 

    

 

 

      

 

 

    

 

 

    

Operating Income

   $ 538       $ 428       26%   $ 1,249       $ 1,160       8%
  

 

 

    

 

 

      

 

 

    

 

 

    

 

(a)

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

 

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