'American Sniper,' 'Friends' Create Difficult Quarter Comparisons For Time Warner, Warns Analyst

Time Warner Inc TWX may miss 1Q16 revenue expectations. Needham’s Laura Martin maintained a Hold rating for the company, saying that Warner Brothers faces tough comps in 1Q because 1Q15 included the subscription video-on-demand sale of Friends, as well as the box office success of American Sniper.

Estimate Reduction

The revenue estimate for 1Q16 has been reduced by 2 percent to $7.3B, representing growth of merely 2 percent y/y. The adjusted operating Income estimate has been reduced by 1 percent to $1.88B, representing 4 percent y/y growth. The adjusted EPS estimate has been reduced by 1 percent to $1.28, with 8 percent y/y growth.

Other Estimates For 1Q16

• Turner revenue and operating income estimates are unchanged at $2.87B and $1.2B, respectively.
• HBO revenue and operating income estimates are unchanged at $1.48B and $437mm, respectively.
• Warner Brothers revenue and operating income estimates have been reduced by 4 percent each to $3.135B and $345mm, respectively.

FY16

Revenue and adjusted EPS estimates for the full year have been reduce by 0.4 percent to $29.93B and by 0.2 percent to $5.32, respectively.