- Share this article on Facebook
- Share this article on Twitter
- Share this article on Email
- Show additional share options
- Share this article on Print
- Share this article on Comment
- Share this article on Whatsapp
- Share this article on Linkedin
- Share this article on Reddit
- Share this article on Pinit
- Share this article on Tumblr
The entertainment conglomerate, led by chairman and CEO Jeffrey Bewkes, posted earnings of $720 million, up 24 percent from the $583 million in the year-ago period. Wall Street had on average predicted a profit of $710 million.
Quarterly revenue amounted to $6.94 billion, down less than one percent from $6.98 billion in the year-ago period. Analysts had, on average, expected $7.15 billion.
Time Warner, which recently said it would spin off its magazine unit Time Inc., had a challenging quarter at its film division amid some box-office disappointments, most notably Jack the Giant Slayer. That led to a revenue decline in its film and TV entertainment segment amid “lower theatrical performance and a decline in television licensing revenues resulting primarily from fewer significant international syndication availabilities,” but the unit’s adjusted operating profit rose from $215 million to $265 million amid lower print and advertising costs.
The conglomerate didn’t announce a write-down for Giant Slayer, which was co-financed by Legendary Pictures, like some observers have suggested it may do. One Wall Street observer said the company wouldn’t take a writedown on the film since it didn’t do so in the latest earnings report.
Positive contributors that the company highlighted were “the strong performance of The Hobbit: An Unexpected Journey and Argo and revenues from the Warner Bros. Studio Tour London — “The Making of Harry Potter,” which opened in March 2012.”
Cowen analyst Doug Creutz adjusted his quarterly and full-year estimates for Time Warner last week “largely to reflect soft first quarter film performance, but offset in the fiscal year by increased confidence in the summer film slate.”
TW’s TV networks unit once again grew revenue and operating profit, but advertising revenue dropped one percent in the first quarter. “Advertising revenue growth at Turner’s domestic entertainment networks was more than offset by declines at its news networks, due to lower demand, and the shutdown of Turner’s general entertainment network, Imagine, in India and TNT television operations in Turkey in the first half of 2012,” the conglomerate said.
During the first quarter, TW also recognized asset impairments of $18 million at the TV networks segment tied to some of the Turner networks’ international intangible assets and programming assets resulting from Turner’s recent decision to shut down certain entertainment networks in Spain.
On a conference call Wednesday, management said that news network ad trends have improved in the second quarter after a 10 percent drop in the first quarter and a mid- to -high-single digit ad gain at the company’s entertainment networks. Second-quarter ad revenue is trending up in the high single digits overall, the firm said.
Asked about recent reports that the Final Four games of March Madness could move from CBS to Time Warner cable networks next year, Bewkes said that the has an option to get those games without any incremental payments next year. The companies have been discussing that possibility, he said without giving further details.
“We’re off to a strong start in 2013, making us even more confident in our full-year outlook,” Bewkes said in Wednesday’s earnings report. “At Warner Bros., we have had another very strong TV season, including having four of the top six comedies on TV and both of the breakout new dramas of this season, Revolution and The Following.”
He added: “And HBO continues to go from strength to strength, powered by hits like Game of Thrones, which is on track this season to become the most-watched series on HBO since The Sopranos.”
TW’s publishing unit posted lower revenue and bottom line figures for the first quarter.
Addressing the planned spin-off of Time Inc. into an independent publicly-traded company, he said the conglomerate expects to complete that process by the end of the year. “As we said when we announced the spin-off in March, we believe this is the best structure for both Time Inc. and Time Warner, and expect this step will create additional value for our stockholders,” Bewkes said.
Sign up for THR news straight to your inbox every day