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Time Warner earnings flat in Q3

Lee Stewart
11-05-2008, 03:25 PM
Time Warner earnings flat in Q3

New Line closing raises operating income

By Susanne Ault -- Video Business, 11/5/2008
NOV. 5 | Time Warner stayed mostly flat in its third-quarter results, despite the powerful theatrical performance of The Dark Knight during the period.

The company posted $1.1 billion in net income for the three months ended Sept. 30. That is about the same amount Time Warner earned for the comparable 2007 frame.

Revenue likewise remained mostly unchanged at $11.7 billion.

The Dark Knight was the year’s biggest theatrical hit, generating $528 million in the U.S., nearly double the gross of its closest movie competitors. But tough comparisons to the prior year’s third quarter led to a 9% decline of filmed entertainment revenue to $2.9 billion. Big contributors to last year's quarter included the theatrical releases of Harry Potter and the Order of the Phoenix, Rush Hour 3 and Hairspray and the DVD bow of 300.

Dark Knight will bow on DVD and Blu-ray Disc on Dec. 9.

However, operating income in the most recent quarter rose 6% to $381 million for the division. That was due to mostly lower overhead from Time Warner’s slimming of its New Line Cinema business as well as reduced advertising expenses.

Time Warner CEO Jeff Bewkes told analysts during a Wednesday conference call that regardless of some slowing, the studio is poised for success in 2008 relative to its competition.

“This year, we have the No. 1 share of box office, the No. 1 share of standard DVD sell-through, the No. 1 share in Blu-ray and No. 1 share in VOD,” said Bewkes.

Strongest Time Warner segments were its cable and networks units. Driven by rising subscriptions and video service growth, the company’s cable segment’s operating income jumped 16% to $788 million.

Within Time Warner's networks business, comprised of Turner Broadcasting and HBO, operating income increased 21% to $909 million. Advertising gains fueled much of this improvement.

Time Warner’s AOL and publishing divisions particularly struggled in the quarter. Falling subscribers curbed AOL’s operating income by 9% to $268 million.

Its publishing division dropped 35% to $162 million in operating income, as its magazines suffer through sliding subscriptions and advertising contributions.

Overall, Bewkes said he is pleased with Time Warner’s results in a difficult financial climate.

“The quarter’s solid earnings and superior free cash flow show the resilience of our businesses—in spite of the challenging economic environment—reflecting both our diversified revenue streams and our ability to make compelling branded content consistently,” said Bewkes. “And we’ve continued to make progress on structural objectives, including our separation of Time Warner Cable, that will move us closer to our goal of becoming the industry’s leading pure content company.”

http://www.videobusiness.com/article/CA6611898.html?desc=topstory