English Entertainment
Time Warner FY-16 and fourth quarter numbers up
BENGALURU: Time Warner Inc. (Time Warner) reported higher numbers across all divisions and important parameters for the year (FY-16, current quarter) and the quarter (Q4-16, current quarter) ended 31 December 2016 as compared to the corresponding year ago periods. Warner Bros, Turner and Home Box Office (HBO) all reported increase in revenues and operating incomes. The two major blips were a 1.6 percent (US19 million) decline in advertising revenue in Q4-16 to $1,187 million from$1,206 million in Q4-15; reduction in Warner Bros Videogames and other revenues for both FY-16 and Q4-16.
Time Warner’s total revenues in FY-16 increased 4.3 percent to $29,318 million from $28,118 million reported for FY-15, while Q4-16 revenues increased 11.5 percent to $7,891 million from $7,079 million. Time Warner’s total operating income in FY-16 increased 9.9 percent to $7,547 million from $6,865 million in QFY-15. The company’s total operating for Q4-16 increased 22 percent to $1,691 million as compared to $1,386 million in Q4-15.
Time Warner’s total adjusted operating income in FY-16 increased 9.8 percent to $7,601 million from $6,923 million in QFY-15. The company’s total operating for Q4-16 increased 25.2 percent to $1,759 million as compared to $1,405 million in Q4-15.
Time Warner chairman and CEO Jeff Bewkes said, “We had another very successful year in 2016, demonstrating once more Time Warner’s ability to deliver strong financial performance alongside creative and programming excellence. All our operating divisions increased revenue and profits while also making investments to capitalize on the growing demand for the very best video content and new ways to deliver it to audiences around the world. Warner Bros. is once again the #1 supplier of television shows for the broadcast networks, and had its second-best year ever at the global box office, nearing $5 billion in receipts with such hits as Batman v. Superman: Dawn of Justice, Suicide Squad and Fantastic Beasts and Where to Find Them.”
Bewkes continued, “Home Box Office again stood apart with its combination of the biggest Hollywood hit movies and best original programming — receiving more primetime Emmy Awards in 2016 than any other network for the 15th consecutive year and launching Westworld, which is produced by Warner Bros. and is the most-watched new series in HBO’s history. We’re also really pleased with the growth of HBO’s domestic OTT product, and we expanded HBO’s international OTT footprint with launches in Spain, Brazil and Argentina in 2016. Turner continued to strengthen its leadership 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. TBS was the #1 ad-supported entertainment cable network on the strength of great sports and a bold new lineup of originals, including Full Frontal with Samantha Bee, and CNN was the #1 news network among adults 18-49 in primetime and the #1 digital news destination in 2016. The deal to be acquired by AT&T Inc., which we announced in October 2016, will accelerate our efforts to spur innovation in the media industry and further strengthen our businesses. We remain on track to close the transaction later this year.”
Warner Bros
Warner Bros revenues for FY-16 were essentially flat at $13,037 million (12,992 million in FY-15). The company says that this reflects higher theatrical and television revenues offset by lower videogames revenues and the impact of foreign exchange rates. Theatrical revenues increased primarily due to the box office releases of Batman v. Superman: Dawn of Justice, Suicide Squad and Fantastic Beasts and Where to Find Them. Television revenues grew primarily due to increased production. Videogames revenues declined as the prior year benefited from the releases of Mortal Kombat X and Batman: Arkham Knight.
Warner Bros Operating Income in FY-16 increased 22 percent ($318 million) to $1,734 million from $1,416 million in FY-15 as increased theatrical contributions and a $90 million gain on the April 2016 sale of Flixster more than offset the impact from lower videogames revenues.
Warner Bros Revenues increased 17 percent ($563 million) to $3,868 million from $3,305 million in Q4-15 which Time Warner says was mainly due to higher theatrical revenues, which benefited from the releases of Fantastic Beasts and Where to Find Them and The Accountant, and higher television revenues, primarily due to higher licensing revenues and increased production.
Warner Bros operating Income increased 57 percent ($208 million) to $574 million in Q4-16 from $366 million in Q4-15 primarily due to the increase in revenues, partially offset by higher associated costs of revenues.
Turner
Turner revenues in FY-16 increased 7 percent ($768 million) to $11,364 million from $10,596 million in FY-15, benefiting from increases of 12 percent ($630 million) in Subscription revenues and 3 percent ($126 million) in Advertising revenues.
The company says that the increase in Subscription revenues was due to higher domestic rates and growth at Turner’s international networks, partially offset by the impact of lower domestic subscribers and foreign exchange rates. Advertising revenues benefited from domestic growth and local currency growth at Turner’s international networks, partially offset by the impact of foreign exchange rates. Domestic advertising revenues grew primarily due to Turner’s news business and sports business, including the 2016 NCAA Division I Men’s Basketball National Championship game, partially offset by lower delivery at certain entertainment networks.
Turner Operating Income increased 7 percent ($285 million) to $4,372 million in FY-16 from $4,087 million in Fy-15 due to the increase in revenues partially offset by higher expenses, including increased programming and marketing costs. Programming costs grew 5 percent primarily due to higher sports costs and increases at Turner’s news business related to its coverage of the 2016 US Presidential election. The increase in marketing costs was primarily associated with new original series related to the TBS and TNT rebrands.
Turner’s revenues in Q4-16 increased 6.7 percent ($177 million) to $2,838 million from $2,661 million in Q4-15, due to an increase of 14 percent ($182 million) in Subscription revenues and 9 percent ($14 million) in Content and other revenues, partially offset by a decrease of 2 percent ($19 million) in Advertising revenues.
The company says that Subscription revenues benefited from higher domestic rates and growth at Turner’s international networks, partially offset by the impact of lower domestic subscribers. Content and other revenues increased primarily due to higher licensing revenues. Advertising revenues decreased due to declines at Turner’s international networks, partially due to foreign exchange rates. Domestic advertising was flat with growth at Turner’s news business offset by lower delivery at certain entertainment networks and lower revenues associated with the MLB postseason games.
Turners Operating Income in Q4-16 increased 8.2 percent ($64 million) to $841 million from $777 million in Q4-15, reflecting revenue growth partially offset by higher expenses, including increased marketing costs primarily due to new original series. Programming expenses were essentially flat.
Home Box Office (HBO)
HBO revenues in FY-16 increased 5 percent ($275 million) to $5,890 million from $5,615 million in FY-15, due to increases of 5 percent ($255 million) in Subscription revenues and 2 percent ($20 million) in Content and other revenues. Subscription revenues grew primarily due to higher domestic rates and international growth. The increase in Content and other revenues primarily reflects higher international licensing revenues, partially offset by lower domestic licensing revenues.
Operating Income in FY-16 increased 2.1 percent ($39 million) to $1,917 million from $1,878 million, reflecting higher revenues partially offset by increased expenses, including higher programming and restructuring and severance costs. Programming costs grew 7 percent, primarily reflecting increased original programming costs, partially offset by a reduction in amortization resulting from a longer estimated utilization period for original programming.
HBO Revenues increased 5.6 percent ($79 million) to $1,491 million in Q4-16 from $1,412 million, due to increases of 5 percent ($64 million) in Subscription revenues and 7 percent ($15 million) in Content and other revenues. The company says that Subscription revenues increased due to higher domestic rates and international growth. The increase in Content and other revenues primarily reflects higher home entertainment revenues, partially offset by lower international licensing revenues.
Operating Income increased 9.2 percent ($36 million) to $429 million in Q4-16 from $393 million in Q4-15, due to the increase in revenues partially offset by higher expenses, including increased distribution expenses related to the timing of home video releases. Programming expenses decreased 2 percent mainly due to lower programming charges, partially offset by increased original programming costs.
UK: The aerial is losing its grip. As broadband becomes the default way Britons watch television, the UK is edging towards a decisive, and divisive, question: should Freeview be switched off by 2034? The issue, highlighted in reporting by The Guardian, has exposed deep fault lines over access, affordability and the future of public service broadcasting.
For nearly 25 years, Freeview has delivered free-to-air television from the BBC, ITV, Channel 4 and Channel 5 to almost every corner of the country. Even now, it remains the UK’s largest TV platform, used in more than 16m homes and on around 10m main household sets. Yet the same broadcasters that built it are now pressing for its closure within eight years.
Their case rests on a structural shift in viewing. Smart TVs, superfast broadband and the Netflix-led streaming boom have pulled audiences online. Advertising economics have followed. By 2034, the number of homes using Freeview as their main TV set is forecast to fall from a peak of almost 12m in 2012 to fewer than 2m, making digital terrestrial television, or DTT, increasingly costly to sustain.
But critics say the rush to switch off risks abandoning those least able, or least willing, to move online.
“I don’t want to be choosing apps and making new accounts,” says Lynette, 80, from Kent. “It is time-consuming and irritating trying to work out where I want to be, to remember the sequence of clicks, with hieroglyphics instead of words. If I make a mistake I have to start again.”
Lynette is among nearly 100,000 people who have signed a “save Freeview” petition launched by campaign group Silver Voices. She fears the government is about to “take [Freeview] away from me and others who either don’t like, can’t afford, or can’t use online versions”.
Official figures underline the fault lines. A report commissioned by the Department for Culture, Media and Sport estimates that by 2035, 1.8m homes will still depend on Freeview. Ofcom’s analysis shows those households are more likely to be disabled, older, living alone, female, and based in the north of England, Wales, Scotland and Northern Ireland.
Freeview is owned by the public service broadcasters through Everyone TV, which also operates Freesat and the newer streaming platform Freely. After two years of review, DCMS is expected to set out its position soon, drawing on three options proposed by Ofcom: a costly upgrade of Freeview’s ageing technology; maintaining a bare-bones service with only core PSB channels; or a full switch-off during the 2030s.
The broadcasters have rallied behind the third option. They argue that 2034 is the logical cut-off, when transmission contracts with network operator Arqiva expire. By then, they say, the cost of broadcasting to a dwindling audience will far outweigh the returns from TV advertising.
Ofcom agrees a crunch point is approaching. In July, the regulator warned of a “tipping point” within the next few years, after which it will no longer be commercially viable for broadcasters to carry the costs of DTT.
Others see risks beyond economics. Questions remain over whether internet TV can reliably deliver emergency broadcasts, such as the daily Covid updates, in the way that universally available DTT can. The UK radio industry has also warned that an internet-only future for TV could push up distribution costs and force some radio stations off air if PSBs no longer share Arqiva’s mast network.
“It is a political hot potato,” says Dennis Reed, founder of Silver Voices, who says he has “dissociated” his organisation from the government’s stakeholder forum, which he believes is “heavily biased” towards streaming.
The Future TV Taskforce, representing the PSBs, counters that moving online could “close the digital divide once and for all”. “We want to be able to plan to ensure that no one is left behind,” a spokesperson says, adding that rising DTT costs could otherwise mean cuts to programme budgets.
The numbers show the scale of the challenge. Of the 1.8m Freeview-dependent homes projected for 2035, around 1.1m are expected to have broadband but not use it for TV. The remaining 700,000 are forecast to lack a broadband connection altogether.
Veterans of the analogue switch-off, completed in 2012 after 76 years, recall similar fears of “TV blackout chaos”. Around 6 per cent of households were labelled “digital refuseniks”, yet a targeted help scheme and a national campaign, fronted by a robot called Digit Al voiced by Matt Lucas, delivered a largely smooth transition.
This time, the BBC is less keen to foot the bill. Tim Davie, the outgoing director general, has said the corporation should not fund a comparable support programme for a Freeview switch-off.
Research for Sky by Oliver & Ohlbaum suggests that with early awareness campaigns and digital inclusion measures, only about 330,000 households would ultimately need hands-on help ahead of a 2034 shutdown.
Meanwhile, viewing habits continue to fragment. Audience body Barb says 7 per cent of UK households no longer own a TV set, choosing to watch on other devices. In December, YouTube overtook the BBC’s combined channels in total UK viewing across TVs, smartphones and tablets, albeit measured at a minimum of three minutes.
That shift may accelerate. YouTube has recently blocked Barb and its partner Kantar from accessing viewing session data, limiting transparency just as online platforms consolidate power.
“When the government chose British Satellite Broadcasting as the ‘winner’ in satellite TV it was Rupert Murdoch’s Sky instead that came out on top,” says a senior TV executive quoted by The Guardian. “There already is such an outsider ready to be the winner in the transition to internet TV; it is YouTube.”
Freeview’s future now hangs on a familiar British dilemma: modernise fast and risk exclusion, or protect universality and pay the price. Either way, the aerial’s days as king of the living room look numbered.
