Bewkes: Strong content will weather storm

TW chief says focus on 'historic expertise' will carry company

NEW YORK -- The recession isn't leaving Time Warner's advertising and content businesses unharmed, but a focus on producing strong content will help the entertainment conglomerate make it through the downturn and emerge stronger than before, CEO and chairman-designate Jeffrey Bewkes told his troops Tuesday.

"Looking back on this year, it's hard to believe how much our world has changed in such a short time," he said in opening his year-end memo to TW staff. "As we work through what Wall Street's meltdown and the deepening recession mean to us, the only sure thing is that uncertain days lie ahead." Bewkes said he is increasingly focusing TW "on our historic expertise in creating compelling content," arguing this remains a key to success in the digital age.

"While some have questioned the long-term future of our industry, the evidence increasingly shows that consumers gravitate toward great content -- whether blockbusters or niche programming," the staff memo said.

As TW programming highlights of 2008, Bewkes cited "The Dark Knight" and its record boxoffice figures, CNN's political coverage and original programming successes, such as "True Blood" on HBO.

However, economic pain is also hitting TW, even though it is less exposed to the advertising market than its peers. "The bulk of our revenues come from our content and subscription operations," Bewkes told his colleagues. "Despite traditionally holding up well in downturns, they're certainly not immune."

And while TW's ad businesses are holding up better than others, "the steep declines in advertising spending in the auto, finance and retail sectors are also taking their toll on us," the CEO said.

Bewkes once again emphasized his focus on reshaping the TW business portfolio and reducing costs. For example, his memo said TW expects to separate Time Warner Cable in the first quarter of 2009. And, he said, layoff decisions were hard, but put the company into a stronger position.

All this should bear fruit once the recession ends, Bewkes suggested. "Keeping our balance sheet and overall financial position strong should help our stock price when the media and entertainment sector recovers," he said.

After thanking Richard Parsons, who leaves the chairman role to him as of Jan. 1, Bewkes closed with an appeal to his staff.

"Please join me in looking to 2009 with confidence," he said. "With Time Warner's many strengths, we'll keep it on top of the media and entertainment industry."
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