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Time Warner’s Home Video Unit Gaining from Hit Movie Releases

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3Q17 performance

Time Warner’s (TWX) home video and electronic delivery business, which is part of its Warner Bros Segment, continues to drive the company’s theatrical product revenues, buoyed by hit movie title releases. In 3Q17, the business unit generated $424 million in revenues, which was 15.2% higher YoY (year-over-year) and represents a CAGR (compound annual growth rate) of 3.6% over the past five quarters.

The revenues from home video department have risen for the past few quarters YoY, driven by movies like Wonder Woman and Kong: Skull Island. In 3Q17, the company released six titles, compared with the seven it released in 3Q16.

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Fiscal 2017 performance

In the first nine months of 2017, the business produced ~$1.14 billion in revenues, compared with $910 million in revenues in the first nine months of 2016. To date, the company has released 13 titles, compared with the 16 it released during the same period last year.

The home video business is highly dependent on popular movie releases. Films It and Justice League garnered more than $1 billion combined in the box office globally. According to the Numbers, a movie data and research service provider, Warner Bros is expected to finish the year with the release of Annabelle: Creation, Blade Runner 2049, and Dunkirk.

According to the Numbers, the domestic home video market in the past 25 years, in terms of revenues, is dominated by Walt Disney (DIS) at $10.6 billion, followed by Warner Bros, Universal (CMCSA), and Twenty-First Century Fox (FOXA) at $8.5 billion, $8.4 billion, and $8.4 billion, respectively.

The merger of Time Warner with AT&T (T) would likely drive the carrier’s Entertainment segment, wherein customers can choose from wide collections of Warner Bros movies.

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