Turner is planning to introduce FilmStruck
On April 26, 2016, Bloomberg reported that Time Warner’s (TWX) Turner was going to launch an online movie subscription service called FilmStruck later this year. According to the report, citing Time Warner, the new service “will be developed and managed by Turner Classic Movies and the Criterion Collection, which owns more than 1,000 arthouse films.”
FIlmStruck will also offer a separate tier priced higher that will offer subscribers access to the complete Criterion movie collection. According to the report, Turner also plans to introduce another online subscription service later this year.
Coleman Breland, president of content distribution for TCM and Turner, noted that the reason for the decision to launch FilmStruck as an online subscription service was that if FilmStruck had been launched as a pay-TV channel, it would have only increased cable bills for pay-TV subscribers. This could have resulted in keeping pay-TV subscribers away from the channel.
However, as a rising number of Millennials move to SVOD (subscription video on demand) services like Netflix (NFLX), the decision to launch FilmStruck could be a move by Time Warner to have an increasing share of this market.
Turner business segment in 4Q15
Time Warner’s Turner business segment posted revenues of $10.6 billion in fiscal 2015, a rise of 2% year-over-year. In 4Q15, revenues were $2.7 billion, up again by 2% over 4Q14.
This business segment had adjusted operating income of $4.1 billion in fiscal 2015, an increase of 32% over fiscal 2014. However, Turner’s adjusted operating income in fiscal 4Q15 declined by 15% to $781 million due to an increase in programming costs.
Time Warner makes up 0.33% of the SPDR S&P 500 ETF (SPY). SPY also has an exposure of 2.6% to the Communication Services sector.