TW's Bewkes upbeat on ad businesses

Economic woes have had no impact yet on TW's financials

NEW YORK -- The markets have been in turmoil, the economy weak, but Time Warner CEO Jeffrey Bewkes feels very good about nearly all of his advertising businesses.

"The economy is the biggest strategic issue on everybody's mind," he told the annual Goldman Sachs Communacopia conference here Wednesday. But it "has not had an effect yet on Time Warner's (financials)."

After the planned spinoff of Time Warner Cable, TW's revenue will be dominated by content sales (40%) and around 35% subscriptions, with only 25% coming from ads, he said.

The first two revenue streams "have for decades not been particularly sensitive to economic slowdowns," Bewkes added.

Out of the ad businesses, a big part comes from the Turner basic cable networks. "Ad growth at these nets has been very, very strong," Bewkes said.

That leaves two areas of economic challenges. Print ads "clearly are weaker," the TW CEO said. And AOL's display ad and third-party ad business has also been soft as CFO John Martin said recently.

Discussing the current market turmoil and whether TW must manage its finances differently, Martin told The Hollywood Reporter on the sidelines of the conference: "No. Our balance sheet is in great shape. We have low leverage. We don't really have any exposure."

Martin said the company always works with a range of financial institutions, thereby reducing its risks.

Asked if TW's film financing approach will be affected by the downfall of investment banks, Martin said the company will also be fine in this respect. "We have consistently taken a diversified approach to financing movies," he said.

Meanwhile, Bewkes on Wednesday also reaffirmed his argument that TW's content businesses will grow faster over the next three to five years than analysts currently expect.

He didn't provide specific guidance.

He reiterated that TW would look for acquisitions in core areas, such as film and TV production businesses, U.S. and international TV networks and maybe magazine brands.

He didn't mention specific companies, but drew laughs when he said: "I rule out the acquisition of subprime mortgage debt."

Asked by THR after the session whether he is looking to buy NBC Universal, Bewkes gave an indirect answer: "People keep asking (about this), but they haven't said (if they would sell)." He also emphasized a key point his team always makes about possible deals -- they would have to ensure high returns.

Bewkes also said blockbuster strategies will help not only in the film business, but also in TV, magazines and maybe even online. After all, people are flocking to "big popular stuff," he said.

Bewkes also once again was asked about whether AOL could be involved in any dealmaking, and he reiterated that everyone in the online space is talking to each other from time to time. "Everybody ... is looking at what is the optimal scale," he said.
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