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How Is Time Warner’s Reduction in Ad Loads Working?

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Time Warner’s reduction in ad loads

Advertising is a key revenue component for Time Warner (TWX). In 1Q17, Time Warner expects advertising revenues at its Turner business division “to be flat to up low single digits.”

The company also expects its international advertising revenue trends to improve in 1Q17, and it expects its news and sports programming to be the key drivers of its advertising business. The company was asked about its advertising strategy at the Deutsche Bank Media, Internet and Telecom Conference in early March.

Time Warner (TWX) reduced its ad loads ~50% for some of its television programs on Turner’s TNT Network. Time Warner stated that the reduction in ad loads saw its viewership rise for these shows, leading to an increase in brand recall and improved targeted advertising.

However, Time Warner also stated that the reduction in ad loads for truTV did not affect its revenues significantly. According to the company, its programming on truTV “covered the lower volume of ad breaks.”

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Time Warner’s 2016 advertising revenues

In 2016, Time Warner (TWX) had advertising revenues of $4.6 billion, which comprised 16% of the company’s total revenues of $29.3 billion. Advertising revenues for Time Warner’s Turner division fell 2% year-over-year, primarily due to decreased international advertising revenues to the mid-single digits.

However, Turner’s US advertising business rose in the mid-single digits in 2016 as the result of high program ratings for Time Warner’s news and sports programming.

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