What "True Detective" Means for HBO and Time Warner Investors

Nic Pizzolatto’s crime anthology sets a record, as HBO enjoys accelerating gains in operating income.

May 17, 2014 at 1:00PM

True Detective Logo

True Detective drew more first-season viewers than any original in HBO history. Source: HBO.

While Game of Thrones gets much of the credit for improving profits at Time Warner's (NYSE:TWX) HBO subsidiary, it's True Detective that deserves the credit for the unit's first-quarter gains, according to Fool contributor Tim Beyers  in the following video.

Why? Warner's first quarter ended on March 31, ahead of the season four premiere of Game of Thrones. During that time, True Detective's eight episodes drew an average of 11.9 million viewers each across all platforms -- the largest-ever audience for an HBO original in its first season. (Season two of True Detective is scheduled to return in 2015.)

And that's just the audience we know about. Millions more may have logged in online to watch the True Detective finale, only to be disappointed when traffic overwhelmed HBO's servers. Word about the network's quality programming is spreading, and it shows in the financials.

Revenue improved 9% to $1.3 billion in the first quarter. Operating income rose 11% during the same period. The second number is particularly important, Tim says, because HBO operating income grew just 8.5% last year. Growth in this key area is accelerating despite higher production costs.

Will that put HBO on a path to spin off from Time Warner and offer a stand-alone HBO Go service? Not yet, Tim says. There are still too many variables to work through. But if growth keeps speeding up, that could change in a hurry.

Now it's your turn to weigh in. Do you see True Detective and Game of Thrones providing enough income for HBO to offer unbundled service? Please watch the video to get the full story, and then leave a comment to let us know your take, including whether you would buy, sell, or short Time Warner stock at current prices.

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Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Time Warner at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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