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

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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