TW shareholders cheer AOL absence

Jeff Bewkes praises Warner Bros., knocks acquisitions

BURBANK -- What's in a name? Apparently, a whole lot, if you're Time Warner.

At Friday's annual shareholders meeting, the loudest applause came after CEO Jeffrey Bewkes reminded attendees that the company has dropped "AOL" from its moniker.

In fact, every public disparagement of AOL seemed to please the crowd assembled at the Steven J. Ross Theater on the Warner Bros. studio lot.

One shareholder complained that Time Warner has billions of dollars in debt on its books because of the ill-fated transaction a decade ago. Why didn't some of that debt transfer to AOL when it was spun off last year?

Bewkes said the company followed accounting rules, then added: "None of us has ever been happy about the problems that occurred with the AOL merger, but it is well in the past."

Later, a shareholder suggested the name of the company be changed from "Time Warner" to "Warner Bros."

"At least we got 'AOL' out of there," Bewkes said.

The magnitude of that mistake obviously still weighs on the minds of shareholders, who watched the value of their shares plunge 90% in the years after AOL used its overvalued stock to buy Time Warner, an event that led to a $99 billion write-off.

But TW's stock has advanced 40% since the previous shareholders meeting and the dividend has been raised by 13%, giving the stock a 3% dividend yield, best among the major media conglomerates. And, said Bewkes, with the recent spinoffs of AOL and Time Warner Cable, TW is now a pure content company.

"Hits matter more than ever before," Bewkes said, because they "reduce uncertainty."

Judging from the videos Bewkes showed, he's guessing Martin Scorsese's "Boardwalk Empire," headed for HBO, and George Clooney's "Memphis Beat," soon to be on TNT, are both hit-bound.

He boasted that Harry Potter is the biggest franchise in the history of movies, and he gave an enthusiastic pitch for Christopher Nolan's "Inception," the Leonardo DiCaprio pic that opens July 16.

"This could be a big one," he said. Afterward, he added: "I'm telling you. Go to this one. See it in a theater."

After noting how successful Warner Bros. has been lately, one shareholder wondered why, then, was the company eliminating its pension for new employees.

"This is a tough one," Bewkes said. He explained that the pension plan requires a cash infusion whenever the stock meaningfully drops, stifling the company's ability to reinvest in its business. "We've seen what that did to the auto industry," he said.

Increasing the company's contribution to 401k plans makes more sense than a pension, he argued.

"We would not do it if it made us uncompetitive with the other companies, but most of the other companies have already gone there," he said.

Also drawing applause was a shareholder complaint that there is too much gratuitous profanity in movies. And perhaps alluding to Miramax and MGM, another shareholder asked if TW was interested in acquiring distressed competitors.

Bewkes said he isn't interested in paying a premium for any acquisition.

"It's a good thing that we're doing well and they aren't," he said. "We don't need to buy anyone's company."

Shareholders re-elected all of the directors during the meeting and passed the other three proposals recommended by the board.

As is the norm nowadays at annual meetings, Bewkes' compensation was discussed. Shareholders noted he earned $19 million in salary, bonuses and other compensation last year and that when all his shares and options are added up, he controls about $112 million in stock.

A shareholder proposal regarding an advisory vote on executive compensation was defeated, as was one that would have required executives to retain a significant percentage of their shares until two years following termination of employment.
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