Time Warner has been benefiting from its significant international presence as it helped the company broaden its client base and product portfolio. The company operates in the United Kingdom, Germany, Canada, France, Japan and other countries besides the United States.
The move is a perfect fit for Time Warner as it has been looking to expand its presence in the Chinese entertainment market. Moreover, Time Warner with its strong content and industry leading portfolio of renowned brands is likely to benefit from the largest and fastest growing Chinese media sector.
In recent years, China has emerged as an important market for media and entertainment companies. Another media and entertainment giant, The Walt Disney Company (DIS), is also augmenting its presence in China.
As per the company, the Chinese box office receipts are expected to reach $4.4 billion in 2013, which has been growing at an estimated CAGR of 45% between 2009 and 2013. Further, animation revenues are projected to remain strong and reach $7.1 billion, reflecting a CAGR of 27% over the same period. As for online video, revenue is forecasted to reach $2 billion, reflecting a CAGR 64%.
These factors collectively provide enough room for development for both the parties with promising opportunities to enhance long-term profitability.
Apart from this strategic alliance, Time Warner is concentrating on solidifying its footprint in existing territories through investments in local production and gaining distribution right for new networks. It is also augmenting its operations in Western Europe.
Alongside, Time Warner has been enhancing its digital presence, enabling consumers to enjoy its content through numerous platforms and devices. It has entered into several content distribution deals with Time Warner Cable Inc. (TWC) and Netflix, Inc. (NFLX), which strengthen its multichannel subscription model by adding more platforms to deliver its content.
Currently, Time Warner holds a Zacks Rank #3 (Hold).
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