As Time Warner results improve, CEO Jeff Bewkes touts digital
Time Warner Chief Executive Jeff Bewkes touted his company's digital initiatives for television and film while also promising to invest more in content in 2012 as the media conglomerate reported improved results for the final quarter of 2011, slightly beating analysts' estimates.
Revenue for the New York-based company was up 5% during the fourth quarter and 8% for the full year to $8.2 billion and $29 billion, respectively. Net income rose a fraction of a percent to $769 million for the quarter and $2.89 billion for the year.
In the company's networks business, which includes TNT, TBS and HBO, revenue grew 5% in the fourth quarter to $3.5 billion as both advertising and cable subscription fees increased. TV networks continued to be Time Warner's most profitable business, with operating income up 26% to $1.14 billion for the fourth quarter.
Movie studio Warner Bros. saw a 9% jump in revenue to $3.9 billion due in large part to the DVD launch of the final "Harry Potter" movie, "Harry Potter and the Deathly Hallows -- Part 2" and the success of the video game Batman: Arkham City. The film unit's operating income was flat at $427 million.
Time Warner's challenged magazine publishing business revenue was flat at $3.7 billion, while operating income increased 21% to $207 million.
On a conference call with analysts Wednesday morning, Bewkes said Time Warner will continue to increase its investments in producing and buying content at both the TV and film divisions this year. The CEO also focused on digital initiatives that will be key to the conglomerate's future growth.
Bewkes said that with the technological systems now in place behind TV Everywhere, which allows cable subscribers to watch channels they pay for on a variety of digital devices, more content and distribution is needed. "TV Everywhere needs to offer a robust amount of content for every network and needs to be on multiple devices, including [Internet] connected televisions," he said.
Bewkes noted the company's HBO Go has been very well received by customers but also acknowledged that business disputes have caused delays in getting it into all subscribers' hands. The on-demand service only became available to Time Warner Cable and Cablevision subscribers in late 2011. "There has been a little friction and not as much speed as we'd like in having consumers get HBO on every device," he conceded.
The CEO also praised the late 2011 launch of UltraViolet, a multi-studio initiative that lets DVD buyers also get a copy of a movie in the "cloud" that they can access on any device. Warner Bros. was the leader in pushing UltraViolet's public launch and also took flack for what some saw as a complex system compared to other digital movie options.
"It's certainly early but the consumer response we've seen so far reinforces how much pent-up demand there is for an easy way to manage and access movie collections," he said.
To further spur sales of UltraViolet movies directly through the Internet, and not in connection to a DVD, Bewkes said he would support making digital downloads available even before the discs go on sale. "A powerful thing would be to have [download sales] start earlier," he said. "We don't think it would cannibalize theatrical [revenue] and it can fit into our retail business."
Bewkes also praised Warner's decision to impose a 56-day delay on DVD rentals through Netflix and thus far unsuccessful effort to impose the same delay on Redbox. He said it has had a positive impact on the studio's DVD sales.
Time Warner also announced that it would increase its quarterly cash divided by 11% to $1.04 per share.
The company's stock was up 1% to $38.65 in midday trading Wednesday.
-- Ben Fritz
Photo: A scene from "Harry Potter and the Deathly Hallows -- Part 2." Credit: Warner Bros.