It’s Official: HBO Is Way More Profitable Than Netflix

Time Warner dislcosed HBO’s results for the first time ever. While Netflix has more subscribers in the U.S., HBO brings in much more money.

Lucy Nicholson / Reuters

Time Warner reported record earnings for 2013 and for the first time broke out separate results for HBO. The whole company’s revenue for the fourth quarter came in at $8.6 billion, up from $8.2 billion in the fourth quarter of 2012. The company’s revenue in 2013 was $29.8 billion up from $28.7 billion last year.

This quarter, HBO’s revenues alone were $1.26 billion — 14.7% of the company’s total revenue — from $1.19 billion in the fourth quarer of 2012, when it was 14.5% of the total. For all of 2013, HBO had revenues of $4.9 billion, up from $4.7 billion last year.

HBO’s operating income was $413 million in the fourth quarter of this year, compared to $430 million in the fourth quarter of 2012. HBO only had a 12% jump in the cost of programming but actually had lower costs for acquiring movies from studios, which has so weighed on Netflix. For the full year, HBO’s operating income was $1.8 billion, a 16% jump.

Netflix’s income and profit numbers were a bit more modest: Its 2013 operating income was $228 million and its net income was $112 million. In the fourth quarter, Netflix had $1.18 billion in revenue, but only $48 million of profit. The profit figure, while much higher than what analysts were expecting, was weighed down by massive costs — $7.3 billion, a 12% jump — of acquiring content from studios like Marvel and Sony. “We continued to grow membership and revenue faster than content expense,” Netflix co-founder and CEO Reed Hastings said in a letter to investors.

Time Warner reporting separate figures for HBO, which had previously been folded into the results of its entire TV division with the Turner cable station business, comes as Netflix posted a breakout year and the rivalry between the two has heated up and executives have even started to take potshots at each other.

In the earnings call following Netflix’s earnings report in January, Hastings responded to an analyst’s question about HBO CEO Richard Plepler seeming to condone rampant password sharing on its subscriber-only web app HBO, “That was an interesting comment I suppose. So I guess Plepler, the CEO of HBO, doesn’t mind me then sharing his account information. So it’s plepler@hbo.com and his password is Netflix Bitch,” Hastings said.

Netflix reported that it had 33.4 million subscribers in the U.S. and 44 million worldwide thanks to its incredibly successful original programming like Orange Is the New Black and House of Cards, up 14% from a year ago near of the high end of its guidance.

Time Warner CEO Jeff Bewkes said today that HBO had 28.6 million U.S. subscribers at the end of 2013. Bewkes also said Time Warner has 130 million worldwide subscribers for HBO and Cinemax.

Update:This piece has been updated with Jeff Bewkes’s comments on the earnings conference call.

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