Published: Thu, February 09, 2017
Economy | By Melissa Porter

Wedbush Raises Time Warner Inc. (TWX) Price Target to $107.50

Time Warner has reported a revenue increase of 11% for the final quarter of 2016, with income for the period totaling $7.9bn based on double-digit growth in its subscription business, plus box office successes within its Warner Bros division, as speculation continues to mount over its proposed $85bn takeover by AT&T.

Time Warner's revenue from Turner division rose to $2.84 billion from $2.66 billion while revenue from Home Box Office rose to $1.49 billion from $1.41 billion in the year-ago quarter. The latest quarter's results include $1.0 billion of premiums paid and costs incurred in connection with debt repurchases. During the same quarter in the previous year, the company posted $1.06 EPS.

Revenue from HBO, home to popular shows such as "Game of Thrones" and the new breakout series "Westworld", rose 5.6% to US$1.49bil.

Turner, the Time Warner unit behind TBS, TNT, and CNN, saw its revenues increase 7% to $2.8 billion, on a rise in worldwide subscriptions, even as advertising sales fell by 2%. While the company's overall revenue increased 4 per cent to $29.3bn, its video game revenue was "essentially flat", hitting $13bn. "We remain on track to close the transaction later this year", Bewkes said in a statement amid speculation about how the Trump administration will weigh the $85.4 billion deal on the regulatory front. The results exceeded Wall Street expectations beating the analyst consensus estimate by $0.06. Analysts on average expected $7.72 billion, according to Thomson Reuters. That led fourth quarter operating income to jump 25 percent to $1.8 billion. Helped by Fantastic Beasts and Where To Find Them, Warner Bros "had its second-best year ever at the global box office". Zacks Investment Research upgraded shares of Time Warner from a "hold" rating to a "buy" rating and set a $108.00 price objective for the company in a research note on Tuesday. Revenues for the cable channel increased 6% to $1.5 billion, which was partly attributable to stronger subscription sales.

The shares rose 0.5 percent to $96.67 at 9:42 NY. Warner Bros. also posted higher TV revenues due to raised licensing income and increased production.

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