Scorecards 2009: Time Warner


Rating: 4 out of 5

Time Warner chairman and CEO Jeffrey Bewkes finally is putting the spotlight on his conglomerate's content machine, with the recent spinoff of AOL having marked the final step in TW's transformation from a failed experiment in converged megamedia.

Management has said that all of its moves, including a previous separation from TW Cable, will prove to Wall Street that the core content businesses can grow strongly for years to come and that 2010 will be the first year to demonstrate this. For 2009, the company recently predicted adjusted earnings per share of at least $1.75 after the AOL spinoff, compared with $1.42 in 2008 for the same group of businesses.

On the M&A front, TW could add to its film library in the new year as it is considered a frontrunner to snap up MGM thanks to its big cash war chest after having been beaten out at the last minute the last time the Lion was on the block.

As for TW's film business, expect chatter about future leadership of Warner Bros. Entertainment to resurface next year. In May, chairman and CEO Barry Meyer and president and COO Alan Horn were tapped for two-year contract extensions that expire in 2011.

In 2009, TW also continued to cut costs at various divisions, particularly the Time magazine unit, which is likely to be a key focus next year.

Management seems concentrated on trying even harder to kick its digital business into a higher gear via a partnership with other publishers that will set up an iTunes-like storefront for magazine content.

Bewkes told THR in the fall that he isn't planning a sale of the whole division, as some had suggested. He even seems willing to hang on to weaker titles for a while, though he has signaled that some of them could be closed or sold down the line.

For much of the year, TW's cable networks continued to hold up better than most amid a slowly improving advertising market, though they faced late challenges. Through the first three quarters, the firm's TV networks unit boosted its operating profit, as did the film unit, though the latter recorded a revenue decline. The Time publishing division saw revenue and profitability decrease.

Time Warner stock is up 42% year-to-date as of Friday when taking into account spinoffs and dividends. That's ahead of Sony and Disney but lagging News Corp., Viacom and CBS.

Top performers

Harry Potter and the Half-Blood Prince ($302 million domestic)
The Hangover ($277 million)
The Blind Side ($165 million)

Harry Potter and the Half-Blood Prince
The Hangover
Gran Torino

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