Time Warner Will Consider Office Space Outside New York in Real Estate Review
CFO John Martin says that 2012 could be a strong year for the company thanks to a promising film slate and a continuation of solid ad trends, but that a longer-term review of the firm's real estate strategy must also look beyond the Big Apple.
NEW YORK - Time Warner management is optimistic that 2012 can be a strong year for the entertainment conglomerate, CFO John Martin told an investor conference in San Francisco on Thursday.
He also said that the company will consider new office space not only inside of, but also outside of New York City as it reviews its current real estate with an eye on reducing costs when current leases expire in the coming years.
The company is "very optimistic" about its 2012 film slate, which includes The Dark Knight Rises, Dark Shadows, Gravity and The Hobbit, this year, Martin told the 22nd annual Citi Entertainment, Media & Telecommunications Conference in a session that was available via Webcast.
Other business trends also look encouraging early in the new year. After weaker fourth-quarter advertising activity, "things seem to be picking up" in the first quarter, Martin said, citing low levels of ad cancellations. While fourth-quarter TV networks ad growth at Time Warner was likely weaker than expected, NBA matches are now "thankfully" back on the air, and ratings have been "terrific" so far," Martin said. Asked about the ad outlook for the full year 2012, he said: "We feel cautiously optimistic."
Asked about potential real estate cost savings in New York, Martin said TW currently occupies 10 buildings with more than 8,000 employees and spends roughly $300 million on office space a year. It owns its headquarters, the Time Warner Center. With most leases up around 2017, the company previously said though that it is approaching the market to look for new space that would allow it to save money and consolidate operations.
He said on Thursday that the company would also be open to space outside of the Big Apple as part of its real estate review, but he didn't mention possible locations. A source said the New York metro area, including parts of New York, New Jersey and Connecticut, will be in TW's focus.
"We are going to be looking to essentially get the best deal for future space and…look for space that is in a terrific environment for our employees to work in," Martin said. But he also emphasized: "We can't just limit it to New York City. We are going to be looking at other areas, too, because unfortunately the environment that we are operating in is we can't be blind to cost of doing business. And operating in New York City is extremely expensive, so we are going to be aggressive and looking around in any number of places."
Asked about sports rights, Martin told the Citi gathering that TW didn't bid for NFL rights as part of a recent extension of NFL TV deals with other networks. "At this point we feel we don't need it," he explained.
Asked about this week's 10-year carriage deal between Walt Disney and Comcast, Martin said it is "fantastic" as it will push more companies to embrace the TV Everywhere model.
Martin also said that there is more upside in licensing content to digital distributors to the likes of Netflix and newer alternatives, including overseas.
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