Turner in fiscal 2Q16
Time Warner’s (TWX) Turner business division had revenues of $3 billion in fiscal 2Q16, an increase of 6% year-over-year. Growth was driven by an 11% increase in subscription revenues and a 6% increase in advertising revenues. Turner had operating income of $1.1 billion, which was flat year-over-year.
Turner’s subscription revenues were around $1.5 billion in fiscal 2Q16. The growth was mainly driven by “higher domestic rates and local currency growth at Turner’s international networks.”
Advertising revenues were $1.3 billion in fiscal 2Q16, mainly driven by the broadcast of the NCAA (National Collegiate Athletic Association) Division I Men’s Basketball National Championship and coverage of the upcoming US presidential elections by Turner’s news channels.
Which factors are driving Turner’s growth?
Time Warner’s investment in original programming is paying off. The company’s five original programming series launched this year have been a success, as indicated by the audience growth for these shows. Other original programming on the TBS network include The Detour and Full Frontal with Samantha Bee, which are also enjoying high program ratings and increasing popularity.
Time Warner also stated at the company’s fiscal 2Q16 earnings call that Turner’s CNN network had a strong demand for ad inventory from advertisers at the ad upfronts. The company said, “To date, 2016 is the most-watched year in CNN’s history and as the US presidential election draws closer, CNN continues to gain momentum and take share from its peers.”
Millennials are moving away from pay-TV operators such as Dish Network (DISH) to OTT (over-the-top) services such as Netflix (NFLX). Turner could be trying to lure Millennials with exciting original content that can boost its program ratings and bring in more advertising revenues.