Analysis of Reportable Segments
Time Warner Inc. operates in 3 segments: Turner; Home Box Office; and Warner Bros..
Segment Profit Margin
Time Warner Inc., profit margin by reportable segment
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|
| Turner | 37.16% | 38.47% | 38.57% | 28.41% | 34.92% |
| Home Box Office | 34.00% | 32.55% | 33.45% | 33.09% | 36.63% |
| Warner Bros. | 12.70% | 13.30% | 10.90% | 9.25% | 10.75% |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
An analysis of segment profit margins between 2013 and 2017 reveals a distinct performance hierarchy among the reportable segments. The Turner and Home Box Office segments consistently maintain high margins, while Warner Bros. operates with significantly lower profitability ratios. A synchronized contraction in margins was observed across all three segments in 2014, followed by a general recovery period starting in 2015.
- Turner Segment
- This segment exhibits the highest overall profitability but also the most volatility. A significant decline occurred in 2014, where margins dropped to 28.41% from 34.92% in 2013. This was followed by a sharp recovery in 2015, reaching a peak of 38.57%. Margins remained elevated through 2016 and 2017, closing the period at 37.16%.
- Home Box Office Segment
- Profit margins for Home Box Office remained relatively stable compared to other segments. After a decrease from 36.63% in 2013 to 33.09% in 2014, the segment maintained a tight range, fluctuating between 32.55% and 34.00% from 2015 through 2017.
- Warner Bros. Segment
- Warner Bros. consistently reports the lowest margins of the group. Following a dip to 9.25% in 2014, the segment showed a steady improvement trend, peaking at 13.30% in 2016. A slight decrease to 12.70% was noted in 2017, though the margin remained above 2013 and 2014 levels.
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Segment Profit Margin: Turner
Time Warner Inc.; Turner; segment profit margin calculation
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Operating income (loss) | 4,489) | 4,372) | 4,087) | 2,954) | 3,486) |
| Revenues | 12,081) | 11,364) | 10,596) | 10,396) | 9,983) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 37.16% | 38.47% | 38.57% | 28.41% | 34.92% |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 2017 Calculation
Segment profit margin = 100 × Operating income (loss) ÷ Revenues
= 100 × 4,489 ÷ 12,081 = 37.16%
The Turner segment exhibited a consistent upward trajectory in revenues over the five-year period from 2013 to 2017. While top-line growth remained steady, operating income and profit margins experienced a period of volatility followed by a phase of relative stabilization.
- Revenue Growth Trends
- Revenues grew incrementally each year, rising from US$ 9,983 million in 2013 to US$ 12,081 million by the end of 2017. This represents a sustained increase in the segment's ability to generate sales over the observed timeframe.
- Operating Income and Profitability Volatility
- A notable decline in profitability occurred in 2014, where operating income dropped to US$ 2,954 million, resulting in the period's lowest segment profit margin of 28.41%. This dip was followed by a significant recovery in 2015, as operating income surged to US$ 4,087 million, driving the profit margin to a peak of 38.57%.
- Margin Stabilization and Efficiency
- From 2015 to 2017, the segment maintained a high profit margin, though a slight downward trend is observable after the 2015 peak. Despite operating income reaching its highest point of US$ 4,489 million in 2017, the profit margin compressed slightly to 37.16%, indicating that the growth in operating expenses marginally outpaced the growth in operating income during the final two years of the period.
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Segment Profit Margin: Home Box Office
Time Warner Inc.; Home Box Office; segment profit margin calculation
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Operating income (loss) | 2,152) | 1,917) | 1,878) | 1,786) | 1,791) |
| Revenues | 6,329) | 5,890) | 5,615) | 5,398) | 4,890) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 34.00% | 32.55% | 33.45% | 33.09% | 36.63% |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 2017 Calculation
Segment profit margin = 100 × Operating income (loss) ÷ Revenues
= 100 × 2,152 ÷ 6,329 = 34.00%
The Home Box Office segment demonstrated consistent top-line growth between 2013 and 2017, characterized by an uninterrupted increase in annual revenues. While operating income generally followed a positive trajectory, the rate of growth in expenses appears to have outpaced revenue growth in the early part of the period, resulting in initial margin compression. However, a strong recovery in both operating income and profit margins was observed in the final year of the analyzed period.
- Revenue Trends
- Revenues climbed steadily from 4,890 million US$ in 2013 to 6,329 million US$ in 2017. This represents a continuous upward trend, indicating a sustained increase in the segment's ability to generate sales over the five-year duration.
- Operating Income Performance
- Operating income remained relatively flat between 2013 and 2014, with a marginal decrease from 1,791 million US$ to 1,786 million US$. Subsequently, a consistent growth pattern emerged, culminating in a peak of 2,152 million US$ by December 31, 2017, with the most significant year-over-year increase occurring between 2016 and 2017.
- Segment Profit Margin Analysis
- The segment profit margin experienced a notable decline from 36.63% in 2013 to 33.09% in 2014. Following this contraction, the margin fluctuated within a narrow range between 32.55% and 33.45% from 2014 to 2016. A positive reversal occurred in 2017, with the margin improving to 34.00%, signaling enhanced operational efficiency relative to the preceding three years, although the figure remained below the 2013 baseline.
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Segment Profit Margin: Warner Bros.
Time Warner Inc.; Warner Bros.; segment profit margin calculation
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Operating income (loss) | 1,761) | 1,734) | 1,416) | 1,159) | 1,324) |
| Revenues | 13,866) | 13,037) | 12,992) | 12,526) | 12,312) |
| Segment Profitability Ratio | |||||
| Segment profit margin1 | 12.70% | 13.30% | 10.90% | 9.25% | 10.75% |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 2017 Calculation
Segment profit margin = 100 × Operating income (loss) ÷ Revenues
= 100 × 1,761 ÷ 13,866 = 12.70%
The financial performance of the Warner Bros. segment between 2013 and 2017 is characterized by consistent revenue growth and an overall improvement in operational efficiency, despite a period of volatility in the early part of the timeframe.
- Revenue Trajectory
- Revenues demonstrated a steady upward trend over the five-year period, rising from US$ 12,312 million in 2013 to US$ 13,866 million in 2017. This consistent growth indicates a sustained expansion of the segment's market activity and top-line earnings.
- Operating Income Performance
- Operating income experienced an initial decline in 2014, dropping to US$ 1,159 million from US$ 1,324 million in 2013. Following this dip, a strong recovery phase occurred, with operating income increasing significantly to US$ 1,734 million in 2016 and reaching US$ 1,761 million by 2017. The growth in operating income outpaced revenue growth over the full period, suggesting a positive shift in the cost structure.
- Segment Profit Margin Dynamics
- The segment profit margin exhibited a V-shaped recovery between 2013 and 2016. After declining to a period low of 9.25% in 2014, the margin expanded to a peak of 13.30% in 2016. While a slight contraction to 12.70% was observed in 2017, the final margin remained 195 basis points higher than the 2013 level, reflecting an overall increase in the segment's profitability per dollar of revenue.
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Segment Return on Assets (Segment ROA)
Time Warner Inc., ROA by reportable segment
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|
| Turner | 16.56% | 16.61% | 15.99% | 11.69% | 13.37% |
| Home Box Office | 14.56% | 13.10% | 13.12% | 12.88% | 13.09% |
| Warner Bros. | 7.93% | 8.05% | 6.84% | 5.64% | 6.60% |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
The analysis of segment return on assets (ROA) from 2013 to 2017 reveals distinct performance trajectories across the three reportable segments, characterized by a universal contraction in 2014 followed by varying degrees of recovery and growth.
- Turner
- This segment exhibited the highest asset efficiency among all analyzed units. After an initial decrease from 13.37% in 2013 to 11.69% in 2014, a strong growth trend emerged, with ROA rising to 15.99% in 2015 and peaking at 16.61% in 2016, before maintaining a stable level of 16.56% in 2017.
- Home Box Office
- Performance in this segment was characterized by high stability. ROA remained consistent, fluctuating narrowly between 12.88% and 13.12% from 2013 to 2016. A significant positive shift occurred in 2017, where the ROA increased to 14.56%, marking the highest efficiency level for this segment within the five-year period.
- Warner Bros.
- This segment consistently reported the lowest return on assets. A decline from 6.60% in 2013 to 5.64% in 2014 was followed by a steady recovery phase, with the ratio climbing to 6.84% in 2015 and reaching a peak of 8.05% in 2016, before a slight moderation to 7.93% in 2017.
Comparative analysis indicates that the Turner segment is the primary driver of asset efficiency, consistently maintaining a lead over the other two segments. While Warner Bros. operates at a significantly lower ROA threshold, it mirrored the recovery pattern seen in Turner following the 2014 dip, suggesting systemic factors influenced the broader portfolio during that fiscal year.
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Segment ROA: Turner
Time Warner Inc.; Turner; segment ROA calculation
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Operating income (loss) | 4,489) | 4,372) | 4,087) | 2,954) | 3,486) |
| Assets | 27,111) | 26,317) | 25,559) | 25,271) | 26,067) |
| Segment Profitability Ratio | |||||
| Segment ROA1 | 16.56% | 16.61% | 15.99% | 11.69% | 13.37% |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 2017 Calculation
Segment ROA = 100 × Operating income (loss) ÷ Assets
= 100 × 4,489 ÷ 27,111 = 16.56%
The Turner segment demonstrated a recovery and growth trajectory between 2013 and 2017, characterized by an initial decline in profitability followed by a sustained increase in operational efficiency and income generation.
- Operating Income Performance
- Operating income experienced a contraction in 2014, decreasing from US$ 3,486 million to US$ 2,954 million. This downturn was followed by a significant rebound in 2015, where income rose to US$ 4,087 million. A consistent upward trend continued through 2017, with operating income reaching a peak of US$ 4,489 million.
- Asset Base Evolution
- The asset base remained relatively stable over the five-year period. A slight reduction was observed in 2014, with assets falling to US$ 25,271 million. From 2015 onward, a gradual and steady increase occurred, culminating in a total of US$ 27,111 million by December 31, 2017.
- Return on Assets (ROA) Analysis
- The Segment ROA mirrored the fluctuations in operating income, reaching a period low of 11.69% in 2014. A sharp recovery took place in 2015, with the ratio ascending to 15.99%. The efficiency peak was reached in 2016 at 16.61%, with a marginal stabilization at 16.56% in 2017. The divergence between the moderate growth in assets and the more aggressive growth in operating income indicates a marked improvement in the segment's ability to generate profit from its asset base.
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Segment ROA: Home Box Office
Time Warner Inc.; Home Box Office; segment ROA calculation
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Operating income (loss) | 2,152) | 1,917) | 1,878) | 1,786) | 1,791) |
| Assets | 14,777) | 14,636) | 14,314) | 13,869) | 13,687) |
| Segment Profitability Ratio | |||||
| Segment ROA1 | 14.56% | 13.10% | 13.12% | 12.88% | 13.09% |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 2017 Calculation
Segment ROA = 100 × Operating income (loss) ÷ Assets
= 100 × 2,152 ÷ 14,777 = 14.56%
The Home Box Office segment exhibited a consistent upward trajectory in both operational earnings and asset accumulation between 2013 and 2017, culminating in a notable acceleration of asset efficiency in the final year of the period.
- Operating Income Performance
- Operating income remained relatively flat between 2013 and 2014, followed by a period of steady growth through 2016. A significant increase was recorded in 2017, with income rising to 2,152 million USD, marking the peak profitability for the period analyzed.
- Asset Base Expansion
- The asset base grew incrementally and without interruption each year, increasing from 13,687 million USD in 2013 to 14,777 million USD in 2017. This steady climb indicates a disciplined increase in the resources deployed within the segment.
- Segment Return on Assets (ROA) Analysis
- Between 2013 and 2016, the ROA remained highly stable, fluctuating within a narrow range between 12.88% and 13.12%. A distinct shift occurred in 2017, as the ROA rose to 14.56%. This improvement indicates that the growth in operating income during the final year significantly outpaced the growth of the asset base, resulting in a higher rate of return on invested capital.
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Segment ROA: Warner Bros.
Time Warner Inc.; Warner Bros.; segment ROA calculation
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Operating income (loss) | 1,761) | 1,734) | 1,416) | 1,159) | 1,324) |
| Assets | 22,193) | 21,550) | 20,699) | 20,559) | 20,066) |
| Segment Profitability Ratio | |||||
| Segment ROA1 | 7.93% | 8.05% | 6.84% | 5.64% | 6.60% |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 2017 Calculation
Segment ROA = 100 × Operating income (loss) ÷ Assets
= 100 × 1,761 ÷ 22,193 = 7.93%
The Warner Bros. segment demonstrated a general upward trajectory in profitability and asset growth between 2013 and 2017, characterized by a recovery in operational efficiency following a performance dip in 2014.
- Operating Income Performance
- Operating income experienced an initial decline, dropping from 1,324 million USD in 2013 to 1,159 million USD in 2014. Following this contraction, a period of sustained growth was observed, with income increasing to 1,416 million USD in 2015 and continuing upward to reach 1,761 million USD by December 31, 2017. This indicates a strong recovery and growth phase in the segment's core earnings capacity over the final three years of the period.
- Asset Base Trends
- The asset base exhibited consistent and steady growth throughout the five-year interval. Assets increased from 20,066 million USD in 2013 to 22,193 million USD in 2017. This incremental rise suggests a stable expansion of the segment's resource base without abrupt structural changes.
- Segment ROA Analysis
- The Segment ROA fluctuated in correlation with operating income. A low of 5.64% was recorded in 2014, resulting from the simultaneous decrease in operating income and increase in total assets. A significant recovery followed, with the ROA climbing to 6.84% in 2015 and peaking at 8.05% in 2016. By 2017, the ratio stabilized slightly at 7.93%. The overall trend from 2014 to 2017 indicates that the growth in operating income outpaced the growth in assets, leading to improved capital efficiency and higher returns on the segment's investments.
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Segment Asset Turnover
Time Warner Inc., asset turnover by reportable segment
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|
| Turner | 0.45 | 0.43 | 0.41 | 0.41 | 0.38 |
| Home Box Office | 0.43 | 0.40 | 0.39 | 0.39 | 0.36 |
| Warner Bros. | 0.62 | 0.60 | 0.63 | 0.61 | 0.61 |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
An analysis of segment asset turnover ratios from 2013 to 2017 reveals divergent performance patterns across the three reportable segments. While the Turner and Home Box Office divisions exhibited consistent improvements in asset utilization efficiency, Warner Bros. maintained a higher but relatively stagnant turnover rate.
- Turner
- A steady upward trajectory is observed, with the asset turnover ratio increasing from 0.38 in 2013 to 0.45 by 2017. This trend indicates a consistent improvement in the segment's ability to generate revenue relative to its asset base over the five-year period.
- Home Box Office
- A growth pattern similar to the Turner segment is evident, as the ratio rose from 0.36 in 2013 to 0.43 in 2017. The efficiency gains were most pronounced between 2013 and 2014, followed by a period of incremental annual growth.
- Warner Bros.
- This segment maintained the highest overall asset turnover of the three reportable segments, though it lacked a clear growth trajectory. The ratio fluctuated within a narrow margin, starting at 0.61 in 2013, peaking at 0.63 in 2015, and closing at 0.62 in 2017.
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Segment Asset Turnover: Turner
Time Warner Inc.; Turner; segment asset turnover calculation
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Revenues | 12,081) | 11,364) | 10,596) | 10,396) | 9,983) |
| Assets | 27,111) | 26,317) | 25,559) | 25,271) | 26,067) |
| Segment Activity Ratio | |||||
| Segment asset turnover1 | 0.45 | 0.43 | 0.41 | 0.41 | 0.38 |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 2017 Calculation
Segment asset turnover = Revenues ÷ Assets
= 12,081 ÷ 27,111 = 0.45
The Turner segment demonstrated a consistent improvement in operational efficiency and revenue generation between 2013 and 2017. Revenue increased steadily throughout the period, while the asset base remained relatively stable, resulting in a positive trend in the segment asset turnover ratio.
- Revenue Performance
- Annual revenues grew from US$ 9,983 million in 2013 to US$ 12,081 million in 2017. This represents a sustained upward trajectory, with revenue expanding by approximately 21% over the five-year period.
- Asset Base Trends
- Total assets remained relatively stable, starting at US$ 26,067 million in 2013 and ending at US$ 27,111 million in 2017. A slight contraction was observed in 2014, followed by a gradual increase through 2017.
- Segment Asset Turnover Efficiency
- The segment asset turnover ratio exhibited a steady increase, rising from 0.38 in 2013 to 0.45 in 2017. This upward trend indicates that the segment successfully increased its revenue generation capacity relative to its asset base, reflecting enhanced productivity and more efficient utilization of resources.
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Segment Asset Turnover: Home Box Office
Time Warner Inc.; Home Box Office; segment asset turnover calculation
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Revenues | 6,329) | 5,890) | 5,615) | 5,398) | 4,890) |
| Assets | 14,777) | 14,636) | 14,314) | 13,869) | 13,687) |
| Segment Activity Ratio | |||||
| Segment asset turnover1 | 0.43 | 0.40 | 0.39 | 0.39 | 0.36 |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 2017 Calculation
Segment asset turnover = Revenues ÷ Assets
= 6,329 ÷ 14,777 = 0.43
The Home Box Office segment exhibited a consistent upward trajectory in both revenue generation and asset efficiency over the five-year period ending December 31, 2017.
- Revenue Performance
- Annual revenues demonstrated uninterrupted growth, increasing from 4,890 million US dollars in 2013 to 6,329 million US dollars in 2017. This steady climb indicates a sustained expansion of the segment's market reach or pricing power during the analyzed period.
- Asset Base Trends
- The total asset base grew at a more moderate pace than revenue, rising from 13,687 million US dollars in 2013 to 14,777 million US dollars in 2017. The gradual nature of this increase suggests that significant capital expenditures were not required to support the observed revenue growth.
- Asset Turnover Efficiency
- The segment asset turnover ratio improved from 0.36 in 2013 to 0.43 in 2017. Because revenue grew at a faster rate than the asset base, the efficiency with which the segment utilized its assets to generate sales increased progressively each year, with a notable jump observed between 2016 and 2017.
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Segment Asset Turnover: Warner Bros.
Time Warner Inc.; Warner Bros.; segment asset turnover calculation
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Revenues | 13,866) | 13,037) | 12,992) | 12,526) | 12,312) |
| Assets | 22,193) | 21,550) | 20,699) | 20,559) | 20,066) |
| Segment Activity Ratio | |||||
| Segment asset turnover1 | 0.62 | 0.60 | 0.63 | 0.61 | 0.61 |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 2017 Calculation
Segment asset turnover = Revenues ÷ Assets
= 13,866 ÷ 22,193 = 0.62
The Warner Bros. segment demonstrated a consistent upward trajectory in both revenue and asset growth between 2013 and 2017, while maintaining a stable level of asset efficiency.
- Revenue Growth
- Annual revenues increased steadily from 12,312 million US dollars in 2013 to 13,866 million US dollars by the end of 2017. This represents a cumulative increase of approximately 12.6% over the five-year period, with a notable acceleration in growth occurring between 2016 and 2017.
- Asset Expansion
- Total assets attributed to the segment rose from 20,066 million US dollars in 2013 to 22,193 million US dollars in 2017. The expansion of the asset base grew by approximately 10.6% over the analyzed timeframe, mirroring the growth pattern observed in revenues.
- Segment Asset Turnover Efficiency
- The asset turnover ratio remained remarkably stable, fluctuating within a narrow corridor between 0.60 and 0.63. The ratio peaked at 0.63 in 2015 before reaching a period low of 0.60 in 2016 and recovering to 0.62 in 2017. This lack of significant variance suggests a linear relationship between asset acquisition and revenue generation, indicating that the segment maintained a consistent level of operational efficiency in utilizing its assets to produce sales.
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Segment Capital Expenditures to Depreciation
Time Warner Inc., capital expenditures to depreciation by reportable segment
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|
| Turner | 1.11 | 1.03 | 0.81 | 0.83 | 0.91 |
| Home Box Office | 1.28 | 1.32 | 0.84 | 0.75 | 0.49 |
| Warner Bros. | 0.77 | 0.46 | 0.62 | 0.94 | 1.18 |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
The analysis of capital expenditures relative to depreciation across the reportable segments from 2013 to 2017 reveals diverging investment strategies. While the Turner and Home Box Office segments exhibited a trend toward increasing capital reinvestment, Warner Bros. experienced a period of significant contraction in its investment-to-depreciation ratio before a partial recovery in the final year.
- Turner
- A period of relative stability was observed between 2013 and 2015, with the ratio fluctuating slightly between 0.91 and 0.81. This indicates that capital expenditures were slightly below the level of depreciation. However, a pivot occurred in 2016 and 2017, where the ratio rose to 1.03 and 1.11 respectively, suggesting a shift toward growth-oriented investment exceeding asset replacement costs.
- Home Box Office
- This segment demonstrated the most consistent upward trajectory. Beginning at a low of 0.49 in 2013, the ratio climbed steadily to 0.84 by 2015 and peaked at 1.32 in 2016. Despite a marginal decline to 1.28 in 2017, the overall trend indicates a substantial increase in capital allocation relative to the depreciation of existing assets, signaling aggressive infrastructure or technology expansion.
- Warner Bros.
- The trend for this segment was inversely related to the other divisions. Starting at 1.18 in 2013, the ratio declined sharply over the following three years, reaching a minimum of 0.46 in 2016. This period of under-investment relative to depreciation suggests a reduction in capital spending or a phase of asset utilization without corresponding replacement. A recovery was noted in 2017, with the ratio increasing to 0.77.
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Segment Capital Expenditures to Depreciation: Turner
Time Warner Inc.; Turner; segment capital expenditures to depreciation calculation
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Capital expenditures | 225) | 196) | 157) | 173) | 210) |
| Depreciation of property, plant and equipment | 202) | 191) | 193) | 209) | 231) |
| Segment Financial Ratio | |||||
| Segment capital expenditures to depreciation1 | 1.11 | 1.03 | 0.81 | 0.83 | 0.91 |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 2017 Calculation
Segment capital expenditures to depreciation = Capital expenditures ÷ Depreciation of property, plant and equipment
= 225 ÷ 202 = 1.11
The Turner segment exhibited a U-shaped trajectory in capital expenditures and a relatively steady decline followed by a slight recovery in depreciation between 2013 and 2017. Capital expenditures decreased from US$ 210 million in 2013 to a low of US$ 157 million in 2015, before rebounding to US$ 225 million by the end of 2017. Concurrently, depreciation expenses trended downward from US$ 231 million in 2013 to US$ 191 million in 2016, with a modest increase to US$ 202 million in 2017.
- Investment Cycle Analysis
- The segment experienced a period of contraction in capital spending from 2013 through 2015. During this interval, the capital expenditures to depreciation ratio declined from 0.91 to 0.81. This indicates that the segment was investing less than the value of the assets being depreciated, suggesting a period of asset base depletion or cost optimization.
- Strategic Shift to Expansion
- A pivot in investment strategy is observed starting in 2016, as the ratio surpassed the 1.0 threshold, reaching 1.03 and subsequently rising to 1.11 in 2017. This transition indicates that capital expenditures began to exceed depreciation, signaling a move toward renewing the asset base and increasing the segment's long-term productive capacity.
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Segment Capital Expenditures to Depreciation: Home Box Office
Time Warner Inc.; Home Box Office; segment capital expenditures to depreciation calculation
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Capital expenditures | 111) | 98) | 68) | 58) | 45) |
| Depreciation of property, plant and equipment | 87) | 74) | 81) | 77) | 91) |
| Segment Financial Ratio | |||||
| Segment capital expenditures to depreciation1 | 1.28 | 1.32 | 0.84 | 0.75 | 0.49 |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 2017 Calculation
Segment capital expenditures to depreciation = Capital expenditures ÷ Depreciation of property, plant and equipment
= 111 ÷ 87 = 1.28
The Home Box Office segment demonstrates a consistent and significant increase in investment levels relative to asset depreciation over the five-year period from 2013 to 2017. The most prominent trend is the steady growth in capital expenditures, which contrasts with a relatively stable, though fluctuating, depreciation expense.
- Capital Expenditure Growth
- Capital expenditures exhibited an uninterrupted upward trajectory, rising from 45 million US dollars in 2013 to 111 million US dollars in 2017. This represents a total increase of approximately 146% over the period, with the most substantial annual jump occurring between 2015 and 2016.
- Depreciation Trends
- Depreciation of property, plant and equipment did not follow a linear path, fluctuating between a high of 91 million US dollars in 2013 and a low of 74 million US dollars in 2016. The lack of a strong growth trend in depreciation indicates that the historical asset base was not expanding at the same pace as the new investments made during the latter half of the period.
- Segment Capital Expenditures to Depreciation Ratio
- The ratio of capital expenditures to depreciation increased from 0.49 in 2013 to 1.28 in 2017. For the first three years, the ratio remained below 1.00, indicating that annual capital spending was insufficient to cover the depreciation of existing assets. However, a pivotal shift occurred in 2016 when the ratio rose to 1.32, signaling a transition toward aggressive growth or significant infrastructure modernization. The ratio remained elevated at 1.28 in 2017, confirming a sustained strategy of expanding the segment's capital base beyond its current depreciation levels.
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Segment Capital Expenditures to Depreciation: Warner Bros.
Time Warner Inc.; Warner Bros.; segment capital expenditures to depreciation calculation
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Capital expenditures | 137) | 86) | 122) | 206) | 236) |
| Depreciation of property, plant and equipment | 179) | 188) | 197) | 218) | 200) |
| Segment Financial Ratio | |||||
| Segment capital expenditures to depreciation1 | 0.77 | 0.46 | 0.62 | 0.94 | 1.18 |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 2017 Calculation
Segment capital expenditures to depreciation = Capital expenditures ÷ Depreciation of property, plant and equipment
= 137 ÷ 179 = 0.77
The Warner Bros. segment exhibited a significant contraction in capital investment from 2013 through 2016, followed by a partial recovery in 2017. While depreciation expenses remained relatively stable over the five-year period, the marked decline in capital expenditures led to a substantial reduction in the segment's reinvestment rate relative to its asset base.
- Capital Expenditure Trends
- Capital expenditures decreased consistently from 2013 to 2016, falling from 236 million US$ to a period low of 86 million US$. This represents a decline of approximately 63.6% over four years. A reversal of this trend occurred in 2017, with expenditures increasing to 137 million US$.
- Depreciation Analysis
- Depreciation of property, plant and equipment showed minimal volatility, peaking at 218 million US$ in 2014 and gradually declining to 179 million US$ by 2017. The stability of these figures suggests a consistent rate of asset amortization despite the fluctuations in new capital spending.
- Capital Expenditures to Depreciation Ratio
- The reinvestment ratio began at 1.18 in 2013, indicating that the segment was investing in new assets at a rate exceeding the depreciation of existing ones. This ratio declined sharply to 0.94 in 2014, 0.62 in 2015, and reached a low of 0.46 in 2016, signifying a period where capital spending was insufficient to cover the depreciation of the asset base. In 2017, the ratio improved to 0.77, reflecting a renewed increase in capital allocation, although it remained well below the 2013 expansionary level.
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Revenues
Time Warner Inc., revenues by reportable segment
US$ in millions
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|
| Turner | 12,081) | 11,364) | 10,596) | 10,396) | 9,983) |
| Home Box Office | 6,329) | 5,890) | 5,615) | 5,398) | 4,890) |
| Warner Bros. | 13,866) | 13,037) | 12,992) | 12,526) | 12,312) |
| Time Inc. | —) | —) | —) | —) | 3,354) |
| Intersegment eliminations | (1,005) | (973) | (1,085) | (961) | (744) |
| Total | 31,271) | 29,318) | 28,118) | 27,359) | 29,795) |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
Total consolidated revenues exhibited a non-linear trajectory over the analyzed five-year period, characterized by an initial contraction followed by a sustained recovery. After decreasing from $29,795 million in 2013 to $27,359 million in 2014, total revenues grew annually, reaching a peak of $31,271 million by December 31, 2017.
- Segmental Growth Performance
- The three primary operational segments—Turner, Home Box Office, and Warner Bros.—demonstrated uninterrupted annual growth from 2013 through 2017. Home Box Office showed the highest relative growth, increasing from $4,890 million to $6,329 million. Turner also experienced significant expansion, rising from $9,983 million to $12,081 million. Warner Bros. remained the largest revenue contributor throughout the period, growing from $12,312 million in 2013 to $13,866 million in 2017.
- Structural Portfolio Change
- A significant shift in the company's reporting structure is observed after 2013, marked by the total absence of revenues from Time Inc., which contributed $3,354 million in the first year of the period. The removal of this segment is the primary driver for the decline in total consolidated revenues observed in 2014.
- Intersegment Eliminations
- Intersegment eliminations increased in magnitude from -$744 million in 2013 to a peak of -$1,085 million in 2015, before stabilizing at -$1,005 million by 2017. This trend suggests a period of increasing internal commercial activity that plateaued in the final two years of the analysis.
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Depreciation of property, plant and equipment
Time Warner Inc., depreciation of property, plant and equipment by reportable segment
US$ in millions
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|
| Turner | 202) | 191) | 193) | 209) | 231) |
| Home Box Office | 87) | 74) | 81) | 77) | 91) |
| Warner Bros. | 179) | 188) | 197) | 218) | 200) |
| Time Inc. | —) | —) | —) | —) | 85) |
| Corporate | 29) | 26) | 21) | 27) | 28) |
| Total | 497) | 479) | 492) | 531) | 635) |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
Total depreciation of property, plant, and equipment experienced an overall downward trajectory between 2013 and 2016, before seeing a modest recovery in 2017. The aggregate depreciation expense decreased from US$ 635 million in 2013 to a period low of US$ 479 million in 2016, eventually settling at US$ 497 million by the end of 2017. A significant portion of the initial decline is attributable to the absence of reportable data for the Time Inc. segment after 2013.
- Turner
- A gradual decline was observed from 2013 to 2016, with depreciation falling from US$ 231 million to US$ 191 million. This trend reversed slightly in 2017, with an increase to US$ 202 million.
- Warner Bros.
- Following a peak of US$ 218 million in 2014, this segment demonstrated a consistent year-over-year decrease in depreciation expenses, concluding the period at US$ 179 million in 2017.
- Home Box Office
- Depreciation costs for this segment were characterized by fluctuation, moving from US$ 91 million in 2013 to a low of US$ 74 million in 2016, before rising to US$ 87 million in 2017.
- Time Inc.
- Depreciation was recorded at US$ 85 million in 2013; however, no data was reported for this segment in subsequent years, indicating a structural change in the reportable segments.
- Corporate
- Corporate depreciation remained relatively stable over the five-year horizon, ranging between a minimum of US$ 21 million in 2015 and a maximum of US$ 29 million in 2017.
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Operating income (loss)
Time Warner Inc., operating income (loss) by reportable segment
US$ in millions
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|
| Turner | 4,489) | 4,372) | 4,087) | 2,954) | 3,486) |
| Home Box Office | 2,152) | 1,917) | 1,878) | 1,786) | 1,791) |
| Warner Bros. | 1,761) | 1,734) | 1,416) | 1,159) | 1,324) |
| Time Inc. | —) | —) | —) | —) | 337) |
| Corporate | (430) | (498) | (367) | (73) | (394) |
| Intersegment eliminations | (52) | 22) | (149) | 149) | 61) |
| Total | 7,920) | 7,547) | 6,865) | 5,975) | 6,605) |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
Total operating income exhibited a recovery and growth trend after an initial decline in 2014. Following a decrease to 5,975 million US dollars in 2014, the aggregate operating income grew consistently over the subsequent three years, reaching 7,920 million US dollars by December 31, 2017.
- Turner
- This segment serves as the largest contributor to total operating income. Despite a contraction in 2014 to 2,954 million US dollars, it experienced a strong upward trajectory, increasing to 4,489 million US dollars by 2017.
- Home Box Office
- A consistent and stable growth pattern is observed in this segment, with operating income rising from 1,791 million US dollars in 2013 to 2,152 million US dollars in 2017.
- Warner Bros.
- Operating income followed a positive trajectory after 2014, with a significant acceleration in growth between 2015 and 2016, concluding the period at 1,761 million US dollars.
- Time Inc.
- Operating income was reported only for the 2013 period at 337 million US dollars, with no reported values for the subsequent years.
- Corporate and Intersegment Eliminations
- Corporate costs remained consistently negative throughout the period, with the most significant loss occurring in 2016 at 498 million US dollars. Intersegment eliminations demonstrated volatility, fluctuating between a high of 149 million US dollars in 2014 and a low of -149 million US dollars in 2015.
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Assets
Time Warner Inc., assets by reportable segment
US$ in millions
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|
| Turner | 27,111) | 26,317) | 25,559) | 25,271) | 26,067) |
| Home Box Office | 14,777) | 14,636) | 14,314) | 13,869) | 13,687) |
| Warner Bros. | 22,193) | 21,550) | 20,699) | 20,559) | 20,066) |
| Time Inc. | —) | —) | —) | —) | 5,667) |
| Corporate | 5,128) | 3,463) | 3,276) | 3,560) | 2,507) |
| Total | 69,209) | 65,966) | 63,848) | 63,259) | 67,994) |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
Total assets experienced a contraction in 2014, decreasing from US$ 67,994 million to US$ 63,259 million, before initiating a steady recovery trend. By December 31, 2017, total assets increased to US$ 69,209 million, surpassing the initial 2013 levels.
- Turner Segment Analysis
- As the largest asset holder among the reportable segments, Turner exhibited a slight decline in 2014 to US$ 25,271 million. This was followed by a period of consistent growth over the subsequent three years, ending at US$ 27,111 million in 2017.
- Warner Bros. and Home Box Office Trends
- Both segments demonstrated uninterrupted upward trajectories throughout the period. Warner Bros. assets grew from US$ 20,066 million in 2013 to US$ 22,193 million in 2017. Home Box Office assets followed a similar pattern of incremental growth, rising from US$ 13,687 million to US$ 14,777 million.
- Time Inc. and Corporate Asset Observations
- Time Inc. assets, valued at US$ 5,667 million in 2013, are absent from the reports starting in 2014, indicating a divestiture or a change in reportable segment structure. Corporate assets showed significant fluctuation, increasing from US$ 2,507 million in 2013 to a peak of US$ 5,128 million in 2017, representing the highest percentage growth relative to the starting value among the remaining segments.
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Capital expenditures
Time Warner Inc., capital expenditures by reportable segment
US$ in millions
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|
| Turner | 225) | 196) | 157) | 173) | 210) |
| Home Box Office | 111) | 98) | 68) | 58) | 45) |
| Warner Bros. | 137) | 86) | 122) | 206) | 236) |
| Time Inc. | —) | —) | —) | —) | 34) |
| Corporate | 183) | 52) | 76) | 37) | 77) |
| Total | 656) | 432) | 423) | 474) | 602) |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
Total capital expenditures exhibited a V-shaped trajectory over the five-year period. Aggregate spending decreased from 602 million US dollars in 2013 to a trough of 423 million US dollars in 2015, before rebounding sharply to a period peak of 656 million US dollars by 2017.
- Home Box Office
- A consistent and uninterrupted upward trend is observed in this segment. Expenditures grew annually from 45 million US dollars in 2013 to 111 million US dollars in 2017, marking the most stable investment growth across all reportable segments.
- Turner
- Investment levels followed a U-shaped pattern, initially declining from 210 million US dollars in 2013 to 157 million US dollars in 2015, and subsequently recovering to reach 225 million US dollars by the end of 2017.
- Warner Bros.
- A substantial contraction in capital spending is evident between 2013 and 2016, with expenditures falling from 236 million US dollars to 86 million US dollars. A partial reversal of this trend occurred in 2017, with spending increasing to 137 million US dollars.
- Corporate and Time Inc.
- Corporate expenditures were characterized by high volatility, culminating in a significant spike to 183 million US dollars in 2017, which contributed heavily to the overall increase in total capital expenditures for that year. Expenditures for Time Inc. were recorded only in 2013 at 34 million US dollars, with no further expenditures reported in subsequent years.
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