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Low Theatrical Revenues Pull Down Warner Bros. Revenue

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Warner Bros.

Time Warner’s (TWX) Warner Bros. had revenues of $13 billion in fiscal 2015, up by 4% year-over-year. However, Warner Bros. had a 13% year-over-year decrease in revenues in fiscal 4Q15, with revenues of $3.3 billion. The decline in revenues was a result of a decline in theatrical revenues from releases including The Hobbit: The Battle of the Five Armies, Interstellar, and Annabelle.

Declining theatrical revenues also pulled down Warner Bros.’ adjusted operating income by 5% in fiscal 4Q15 to $373 million. However, in fiscal 2015, adjusted operating income was $1.4 billion, up by 15% over fiscal 2014.

In comparison, 21st Century Fox’s (FOXA) Filmed Entertainment segment had revenues of $2.4 billion in fiscal 2Q16, a decline of $392 million over fiscal 2Q15.

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On the other hand, Comcast’s (CMCSA) Universal Pictures had its most profitable year in fiscal 2015, with operating cash flow of $1.2 billion, a rise of 74% over fiscal 2014. Universal Pictures movies such as Jurassic World and Minions drove revenue growth for this division. This segment had revenues of $1.6 billion in 4Q15, up by 25.8% over 4Q14.

The Walt Disney Company’s (DIS) Studio Entertainment segment had revenues of $2.7 billion in fiscal 1Q16, up by 46% year-over-year.

Television revenues

International content licensing revenues drove the double-digit growth in television revenues in fiscal 2015. Time Warner continues to see a spurt in demand in international markets for its television content.

In domestic markets, growth in licensing revenues was driven by TV shows such as 2 Broke Girls, The Big Bang Theory, Person of Interest, Seinfeld, and Friends.

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Video game revenues

In fiscal 2015, Time Warner earned revenues from video games of around $1.5 billion and continues to be optimistic about its growth.

Theatrical releases

In fiscal 2016 through 2020, Time Warner expects to release about 17 movies from its franchises of DC, Lego, and World of Harry Potter.

Time Warner makes up 0.29% of the iShares S&P 500 Index (IVV). For an investor interested in exposure to computers, IVV has 3.9% exposure to the sector.

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