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What’s the Outlook for Warner Bros. in 2017?

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Feb. 23 2017, Updated 7:43 a.m. ET

Franchise-focused strategy

Between 2016 and 2020, Time Warner (TWX) expects to release ~17 movies from its DC, Lego, and World of Harry Potter franchises. In 2017, Warner Bros. expects to release two movies from the DC franchise, along with The Lego Batman Movie.

Time Warner stated on its 2016 earnings call that it expected growth in Warner Bros.’ adjusted operating income to be primarily driven by growth in its theatrical distribution and video game businesses.

When it comes to Warner Bros.’ video game business, the company has mobile games and two console games from its franchises set to release in 2017. Time Warner was asked on its 2016 earnings call about how it expected Warner Bros. to continue on a path of growth in 2017 and beyond.

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The company stated that it continued to be optimistic about its franchise-focused strategy. Time Warner further stated that when it comes to its television programming business, it does expect a slowdown in producing television programming for broadcast television networks. However, the company stated that it continues to view an opportunity in producing content for premium television networks and streaming operators such as Netflix (NFLX).

Time Warner also elaborated further by stating that when it comes to Warner Bros.’ video game business, it intends to scale up by releasing more console and mobile games. 

The company also stated that it’s continuing its efforts to develop an SVOD (subscription video on demand) service for the Chinese (FXI) market. Time Warner views China as a significant market for growth in the long term, whether it comes to creating local content or bringing English-language content to China.

Warner Bros.’ 2016

Time Warner’s Warner Bros. had revenue of $13 billion in 2016, flat year-over-year (or YoY). The business’s theatrical revenue rose only 9% year-over-year to $5.6 billion in 2016, while it saw television programming revenue of $5.8 billion, a rise of 3% YoY.

Notably, Time Warner makes up 0.37% of the SPDR S&P 500 ETF (SPY). SPY has 3.9% exposure to the computers sector.

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