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Time Warner CFO Upbeat on Home Video Biz

4 May, 2016 By: Erik Gruenwedel

Time Warner CFO Howard Averill

Despite a 12% downturn in home entertainment revenue for the first quarter, ended March 31, Time Warner CFO Howard Averill said he expects better results for Warner Home Video going forward. Averill said the studio benefited in the previous-year quarter from The Hobbit: The Battle of the Five Armies. The title sold more than 3.4 million DVD/Blu-ray Disc units, generating $70.4 million, according to The-Numbers.com.

“Despite the difficult comparisons, electronic sellthrough sales were up mid-single digits in the quarter. We expect our home entertainment trends to improve in the back half of the year as a result of a stronger theatrical slate,” Averill said on the May 4 fiscal call. 

Warner Home Video reported packaged-media and digital revenue from theatrical product dropped 13% to $321 million, from $369 million during the previous-year period. Revenue from sales of discs and digital distribution of television content fell 11% to $94 million, from $106 million.

Meanwhile, Warner Bros., which includes Warner Bros. Home Entertainment, reported a 31% increase in operating income to $424 million, from $324 million a year ago. Revenue dipped 3% to $3.1 billion, from $3.19 billion.

Theatrical revenue dropped due in part to year-over-year comparisons with Batman v Superman: Dawn of Justice released late in the quarter and American Sniper and The Hobbit: The Battle of the Five Armies a year ago. Television revenue increased primarily due to higher international licensing and higher initial telecast revenue. The increase in video game revenue was largely due to Warner Bros.’ "Lego" and "Mortal Kombat" franchises.

Batman v Superman has generated $863 million at the global box office, including $325 million domestically, since its March 25 debut. 

Separately, HBO operating income increased 4% to $477 million, from $458 million. Revenue increased 8% ($28 million) to $1.5 billion, due to increases of 5% ($57 million) in subscription revenue and 23% ($51 million) in content and other revenue. Subscription revenue grew primarily due to higher domestic rates and subscribers. The increase in content and other revenue primarily reflected higher international licensing sales, partially offset by lower home entertainment revenue.

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