Windows Work? ‘Harry Potter’ DVD Sales help Drive Time Warner’s Q4 Profits

Delaying DVD and Blu-ray rental releases to outlets including Netflix (NSDQ: NFLX) and Redbox made the magic of Harry Potter even more potent. That was some of the takeaway from Time Warner (NYSE: TWX) Inc.’s fourth-quarter financial report to investors Wednesday. Driven partly by strong disc sales of its eighth and final Potter movie, Harry Potter and the Deathly Hallows – Part II, the company reported a 5 percent quarterly spike in revenue to $8.2 billion. Operating income also increased, spiking 17 percent to $1.7 billion for the three-month period ending Dec. 31.

Time Warner’s filmed entertainment division grew 7 percent in the fourth quarter, bringing in $3.9 billion in revenue.

The disc rental delays, Time Warner CEO Jeff Bewkes told investors, “have enabled our titles to significantly outperform competitive titles without a window.”

Warner Home Entertainment recently extended from 28 to 56 days the delay in which it makes its movies available for rental on Netflix. It’s also trying to extend Redbox’s delay to 56 days, although the kiosk chain is resisting. “We’ll keep working to extend the window for kiosk owners and brick-and-mortar chains,” Bewkes said.

Time Warner’s growth was also spurred by its networks division, with subscriptions to HBO and and carriage fees for channels like TNT leading to a 5 percent growth in revenue to $3.5 billion.

For the entire year, Time Warner reported an 8 percent uptick in revenue to $29 billion and 7 percent growth in operating income to $5.8 billion.

Bewkes cited the HBO Go streaming initiative as a growth driver for the conglomerate’s subscription business, which also grew 5 percent in the fourth quarter.

He used the call to urge major cable carriers including Comcast (NSDQ: CMCSA) to make HBO Go available through connected TV devices including Roku, noting that greater accessibility to premium cable content will make consumers less likely to cancel their cable subscriptions in favor of over-the-top programming services.

“Not allowing the consumer to access premium content on any device they choose actually increases the relative value of over the top services that really offer the same programming at a later window,” Bewkes said.