Time Warner on Wednesday provided financial details about its online video licensing revenue, but said the time is not right for a broadband subscription channel featuring TW productions.
TW also reiterated that Warner Bros. remains on track to bring in its second-highest annual operating profit ever. And CEO Jeff Bewkes said that the conglomerate expects to name a new head of CNN by year’s end and discussed U.S. subscriber growth trends at HBO and the possibility of NFL content on TW networks.
CFO John Martin told an earnings conference call that Warner recorded more than $100 million in subscription VOD revenue from such online distributors as Netflix, Amazon.com and its LoveFilm in the third quarter.
For the first nine months of 2012, that revenue stands north of $250 million, excluding the money that half-owned joint venture channel CW makes off Netflix, he said. The CW revenue could amount to another $60 million-$70 million in revenue, Martin said.
About two-thirds of that come from licensed TV shows versus a third from film. Two-thirds of the revenue come from the U.S. with the rest from international markets via the likes of LoveFilm in Europe. And Netflix contributes about 40 percent-45 percent of the total revenue, Martin said.
“We see greater opportunities in the future,” he said, adding that the company is talking to additional digital distributors. Added Bewkes: “It is a recurring revenue stream and we hope to grow that.”
Warner Bros. will see its adjusted operating profit before depreciation and amortization for 2012 come in only “modestly” below a record 2011 performance, according to Martin.
“It will be the second-highest year of profits in the history of Warner Bros.,” he added.
Bewkes also once again highlighted CNN’s ratings challenges. The news network’s audience
has improved recently amid the U.S. presidential election and Hurricane Sandy coverage.
“But CNN can do a better job of attracting and retaining viewers” when news isn’t breaking, he reiterated past comments.
Bewkes also lauded HBO for currently recording the best U.S. subscriber growth in a while with international growth being even better with a gain of about 30 percent so far this year.
Could Time Warner’s networks unit bid for NFL games packages?
“We don’t need such a thing,” Bewkes said, adding that it depends on the content and its price.
“We would consider it,” but only buy it “if confident that we can monetize it and have it improve our economics.”
In the meantime, current sports rights help position TW’s networks unit well for carriage fee increases in carriage renewals, Bewkes said.
Asked about the weak start to the broadcast TV networks’ fall season, Bewkes said “our shows are doing good,” and cable ratings have been stable. “Some of the pressure on broadcast ratings is clearly coming from viewing on alternative platforms,” such as VOD on TV, HBO Go, TV Everywhere and others, which will eventually be measured reliably, he said.
Bewkes was also asked why TW is not launched a direct-to-customer on-demand broadband network. He said that “a subscription-broadband network is not ready for primetime…It is not clear that’s the best way to offer all genres to consumers” as people are used to watching branded genre networks.
Email: Georg.Szalai@thr.com
Twitter: @georgszalai
