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A Look at Time Warner’s HBO Programming Strategy

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Jun. 24 2016, Updated 12:04 p.m. ET

HBO programming

Time Warner’s (TWX) HBO (Home Box Office) earns a majority of its revenues through subscription and content licensing. The company is seeing a rising demand for its programming and has been able to benefit from monetizing its original content effectively.

In late May, there was a management change at HBO. According to a Bloomberg report, Casey Bloys became HBO’s president of programming, and Michael Lombardo stepped down from the position after 30 years with HBO.

The company stated in its fiscal 1Q16 earnings call, “We are excited about our upcoming programming lineup. And with continued investments in the brand and product, we are in a great position to capitalize on the significant global opportunities for premium services.”

Time Warner also explained its rationale for how it measures a show’s success. It said it looks at whether the show resonated with the consumer, had good user engagement, and elevated the HBO brand.

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HBO in fiscal 1Q16

HBO made up around 20% of Time Warner’s total revenues of $7.3 billion in fiscal 1Q16. It had revenues of $1.5 billion in fiscal 1Q16, an 8% growth year-over-year. The popularity and increasing demand for its content can be gauged from HBO’s content licensing and other revenues increasing 23% year-over-year to $270 million in fiscal 1Q16. The rise in content licensing revenues was largely bolstered by the demand for its content in international markets.

Time Warner makes up 0.32% of the SPDR S&P 500 ETF (SPY). SPY has an exposure of 2.7% to the communications services sector. It also holds 0.22% of Netflix (NFLX), 0.18% of 21st Century Fox (FOXA), and 0.12% of CBS (CBS).

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