NEW YORK--(BUSINESS WIRE)--Time Warner Inc. (NYSE:TWX) today reported financial results for its second quarter ended June 30, 2016.

Chairman and Chief Executive Officer Jeff Bewkes said: “We had a strong first half of 2016, which puts us ahead of our original goals for the year. Our performance reflects the creative excellence resulting from investments we’ve been making in the very best content. At the same time, we’re capitalizing on new distribution opportunities to take advantage of the growing demand for high-quality video content around the world. As an example of our creative excellence, Time Warner received 148 Primetime Emmy nominations - more than any other company - with HBO’s 94 again setting the pace for the industry. In the second quarter, TNT and TBS finished as the two highest rated ad-supported cable networks in primetime among adults 18-49, and Warner Bros. once again came out of the upfront as the leading supplier to broadcast television. Warner Bros. also gained momentum in film with recent successes, such as Central Intelligence and The Conjuring 2, and anticipation is running high for Suicide Squad, which debuts this week.”

Mr. Bewkes continued: “Today, we also announced our 10% investment in Hulu LLC and that Turner has separately signed an affiliate agreement for its full suite of networks to be carried on Hulu’s live-streaming service slated for launch early next year. These are just the latest examples of our commitment to supporting innovative digital services that allow consumers to access high-quality content however they want it across a variety of platforms. We’re confident the multiple investments we’re making in these types of services position the Company to benefit from growing global demand for the strongest network brands and very best video content.”

Company Results

Revenues decreased 5% to $7.0 billion due to a decline at Warner Bros., partially offset by growth at Turner and Home Box Office and lower intersegment eliminations. Revenues included the unfavorable impact of foreign exchange rates of approximately $60 million in the quarter.Operating Income decreased 1% to $1.8 billion due to decreases at Warner Bros. and Home Box Office, partially offset by a swing in intersegment eliminations. Adjusted Operating Income declined 5% to $1.8 billion.

The Company posted Diluted Income per Common Share from Continuing Operations (“EPS”) of $1.20 compared to $1.16 for the prior year quarter. Adjusted Diluted Income per Common Share from Continuing Operations (“Adjusted EPS”) was $1.29versus $1.25 for the prior year quarter.

For the first six months of 2016, Cash Provided by Operations from Continuing Operations reached $2.0 billion and Free Cash Flow totaled $1.9 billion.

Refer to “Use of Non-GAAP Financial Measures” in this release for a discussion of the non-GAAP financial measures used in this release and the reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

Stock Repurchase Program Update

From January 1, 2016 through July 29, 2016, the Company repurchased approximately 23 million shares of common stock for approximately $1.6 billion. These amounts reflect the purchase of approximately 9 million shares of common stock for approximately $700 million since the amounts reported in the Company’s first quarter earnings release on May 4, 2016. At July 29, 2016, approximately $3.4 billion remained available for repurchases under the Company’s stock repurchase program.

TURNER

Revenues increased 6% ($183 million) to $3.0 billion, due to increases of 11% ($142 million) in Subscription revenues and 6% ($73 million) in Advertising revenues, partially offset by a decline of 15% ($32 million) in Content and other revenues. Subscription revenues increased due to higher domestic rates and local currency 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, primarily due to Turner’s news business and the 2016 NCAA Division I Men’s Basketball National Championship, and local currency growth at Turner’s international networks, partially offset by the impact of foreign exchange rates. The decline in Content and other revenues was due to lower domestic licensing revenues.

Operating Income and Adjusted Operating Income were both flat at $1.1 billion, as the growth in revenues was offset by higher expenses, including increased programming and marketing costs. Programming costs grew 11% primarily due to higher sports and original programming costs at Turner’s domestic entertainment networks. The increase in marketing costs was associated with new original series related to the TBS and TNT rebrands.

In July, Turner received 22 Primetime Emmy nominations and CNN received 15 News & Documentary Emmy Awards nominations, a record for the network. During the second quarter of 2016: Turner had 3 of the top 5 ad-supported cable networks in primetime among adults 18-49 with TNT, TBS and Adult Swim ranking #1, #2 and #5, respectively; Adult Swim was the #1 ad-supported cable network in total day among adults 18-34; and CNN was the #1 news network among adults 18-49 in primetime for the third consecutive quarter. Year-to-date, TBS’ Wrecked and The Detour are the top 2 new comedies on ad-supported cable among adults 18-49. Game 7 of the NBA Western Conference Finals on TNT was the most-viewed NBA telecast of all time on cable and TNT’s most watched program ever with an average of nearly 16 million total viewers.

HOME BOX OFFICE

Revenues increased 2% ($29 million) to $1.5 billion, due to an increase of 6% ($72 million) in Subscription revenues partially offset by a decline of 17% ($43 million) in Content and other revenues. Subscription revenues increased due to higher domestic rates and subscribers and international growth. The decrease in Content and other revenues was due to lower domestic licensing revenues, partially offset by higher international licensing revenues.

Operating Income and Adjusted Operating Income both decreased 5% ($27 million) to $481 million, as the growth in revenues was more than offset by higher expenses, including increased programming and restructuring and severance costs. Programming costs increased 6% primarily reflecting higher programming charges and expenses for original series, partially offset by a reduction in amortization resulting from a longer estimated utilization period for original programming.

The most recent seasons of Game of Thrones, Silicon Valley and Veep all grew viewership double digits due to growth on HBO’s digital platforms,and Game of Thrones averaged over 25 million viewers, a record for an HBO original series. In July, HBO and Cinemax received a combined 98 Primetime Emmy nominations. HBO received 94 nominations, the most for any network for the 16th year in a row. HBO’s nominations included Outstanding Comedy Series for Silicon Valley andVeep, Outstanding Drama Series for Game of Thrones and Outstanding Television Movie for All the Way and Confirmation.

WARNER BROS.

Revenues decreased 19% ($640 million) to $2.7 billion, primarily due to lower videogames, home entertainment and television licensing revenues. Videogames revenues declined as the prior year quarter included the releases of Batman: Arkham Knight and Mortal Kombat X. Home entertainment revenues declined due to fewer theatrical home video releases in the current year quarter, including the comparison to the release of American Sniper in the prior year quarter, and lower carryover revenues. Television licensing revenues declined as the prior year quarter benefited from the second-cycle syndication of The Big Bang Theory and the subscription video-on-demand licensing of Seinfeld.

Operating Income decreased 10% ($33 million) to $308 million, due to the decline in revenues, partially offset by lower associated costs of revenues due to the number and mix of film and videogames releases, a $90 million gain on the April 2016 sale of Flixster and lower film valuation adjustments.

Adjusted Operating Income decreased 37% ($127 million) to $217 million. Adjusted Operating Income for the current year quarter excludes the gain on the sale of Flixster.

In July, Warner Bros. received 32 Primetime Emmy nominations across 13 series. Heading into the 2016-2017 television season, Warner Bros. is once again the #1 producer of shows for the broadcast networks, a position it has held for 13 of the last 14 seasons. Warner Bros. will have 31 series on broadcast networks, 22 of which are returning series, the most in Warner Bros.’ history. In total, Warner Bros. will produce 65 series for the upcoming season across all networks and services.

CONSOLIDATED NET INCOME AND PER SHARE RESULTS

Second-Quarter Results

For the three months ended June 30, 2016, the Company had Income from Continuing Operations attributable to Time Warner Inc. shareholders of $952 million and EPS of $1.20. This compares to Income from Continuing Operations attributable to Time Warner Inc. shareholders for the second quarter of 2015 of $971 million and EPS of $1.16. The increase in EPS primarily reflects fewer shares outstanding.

Adjusted EPS was $1.29for the three months ended June 30, 2016, compared to $1.25 for last year’s second quarter. The increase in Adjusted EPS primarily reflects fewer shares outstanding and a lower effective tax rate.

For the second quarters of 2016 and 2015, the Company had Net Income attributable to Time Warner Inc. shareholders of $952 million and $971 million, respectively.

ABOUT TIME WARNER INC.

Time Warner Inc., a global leader in media and entertainment with businesses in television networks and film and TV entertainment, uses its industry-leading operating scale and brands to create, package and deliver high-quality content worldwide on a multi-platform basis.