Time Warner: Growth Unhampered

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Bid or without, company grows and delivers

Time Warner has outperformed the broader S&P 500 market so far this year by about three percentage points.

Probably because of the $107.50/share bid by a bigger AT&T, but at $92.57 Time Warner trades at 2.5x its book value. The entertainment company also had a debt-equity ratio of 0.8x with 1.74% dividend yield.

For 2017, Time Warner delivered a healthy 6.7% rise in revenue with 34% increase in profits.

The company also ended up with $1.1 billion more in cash at $2.6 billion as of year end 2017.

“We had another very successful year in 2017, achieving our financial goals thanks to the great creative and programming excellence across Time Warner. All three of our operating divisions increased revenue and profits while also investing to capitalize on the growing demand for the most creative and compelling content as well as new ways to deliver it to audiences worldwide. Warner Bros. had its best year ever at the global box office with its films grossing over $5 billion in box office receipts, led by hits like Wonder Woman, It and Dunkirk, which received eight Academy Award nominations, including for Best Picture. Warner Bros. also remains the #1 supplier of television shows for the broadcast networks, and saw continued growth in games with franchise releases Middle-earth: Shadow of War and Injustice 2.”

“HBO again excelled with its combination of the biggest Hollywood hit movies and awardwinning original programming – receiving more Primetime Emmy Awards in 2017 than any other network for the 16th consecutive year as well as four Golden Globe Awards in 2018 for Big Little Lies, also the most of any network. Led by its great content, Home Box Office delivered its highest increase in domestic subscribers ever in 2017 and its best subscription revenue growth in over 20 years. Turner continued to deliver exceptional value with TBS, TNT and Adult Swim all ranking among ad-supported cable’s top five networks in primetime among adults 18-49 for the year. Turner claimed the #1 comedy across all television among adults 18-34 with Adult Swim’s Rick and Morty, and CNN was the #1 digital news destination for the second year in a row. We remain excited about the proposed merger with AT&T, pending judicial review, and the potential to accelerate our pace of innovation and connect more directly with consumers.”

Chairman and Chief Executive Officer Jeff Bewkes

Analysts have an overweight recommendation with $104.7/share target price.

Personal estimates of this blog indicated a per share figure of $97.

Disclosure: AT&T shareholder.

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