Entertainment Industry

Category: TNT

Warner Bros. delivers for Time Warner in third quarter

Time Warner Inc. said it had third-quarter profits of $822 million,  much of driven by "Harry Potter and the Deathly Hallows: Part 2."

Harry Potter went out with a bang.

Time Warner Inc. said Wednesday it had third-quarter profits of $822 million, a 57% increase compared with the same period a year ago, and revenues of $7.07 billion, a jump of 11%.

Much of the gains were driven by the strong box-office performance of "Harry Potter and the Deathly Hallows: Part 2." The last chapter of the long-running Warner Bros. franchise took in $1.3 billion around the world. For the quarter, Time Warner's filmed entertainment unit, which also includes television production, had revenues of $3.3 billion, up 17% from the third quarter of 2010. Operating income went from $209 million to $528 million.

But Time Warner Chief Executive Jeff Bewkes was quick to tell analysts that Warner Bros. was more than a one-man show.

"It wasn’t all about Harry at Warner Bros.," Bewkes told analysts during a conference call Wednesday morning. "Contagion" and "Horrible Bosses" were also strong performers for the studio, as was revenue from reruns of its hit sitcom "The Big Bang Theory."

Even though the current television season is not even two months old, Bewkes expressed confidence that Warner Bros.-produced new shows, including the sitcoms "Two Broke Girls" and "Suburgatory" and the drama "Persons of Interest," would be long-term moneymakers for the studio.

"Our syndication pipeline is built," Bewkes said, adding that a hit comedy is still the "holy grail" of the television business, with the potential to become "multibillion-dollar annuities."

Although Warner Bros. is on a roll, Time Warner's Turner Broadcasting is still going through some growing pains. Overall, Time Warner's networks group, which includes HBO, had revenues of $1.09 billion, an increase of about 6%. However, operating income fell 4% to $1.09 billion.

Although the new TNT original series "Falling Skies" was solid and "The Big Bang Theory" repeats are delivering for TBS, much of the other programming on the two networks is struggling.

"TBS and TNT ratings were softer than anticipated," said Time Warner Chief Financial Officer John Martin.

Bewkes also hinted that Turner Broadcasting would be willing to kick the tires of the NFL, which has talked about introducing a new eight-game package. However, he stressed that he would only buy NFL rights if the company could make money on it, saying he wasn't interested in a loss-leader.

Bewkes also took a little shot at Time Warner Cable, the nation's second-largest cable operator, which was spun off from Time Warner a little over two years ago. During its recent earnings call, Time Warner Cable suggested that growth prospects for the premium channel sector, which includes HBO, was slowing.

That, Bewkes said, was "kind of a backward-looking statement they made."

Bewkes has been frustrated with Time Warner Cable for not launching a new HBO service that allows subscribers to watch the channel on their iPads. Cablevision, another large cable operator, is also yet to sign a deal for the service, which is called HBO Go.

Although Bewkes did not call out either cable operator by name, he said he was "hopeful for their sake" that HBO Go would be available to their subscribers in the next few months.

-- Joe Flint

RELATED:

Fading TV sales pushes Sony into the red

Last "Harry Potter" film breaks box-office record

Comcast profit up 5%, though NBC and Universal film struggle

Photo: Daniel Radcliffe in "Harry Potter and the Deathly Hallows: Part 2." Credit: Warner Bros.

'Hawaii Five-0' could become the next billion-dollar franchise for CBS

"Hawaii Five-0" books 'em for CBS. 

Profits, that is.

The sun-drenched remake of "Hawaii Five-O," starring Alex O'Laughlin and Scott Caan, can boast something few first-season scripted TV shows can: It is already on track to turn a profit. 

On a conference call with analysts regarding first quarter results Tuesday, CBS Corp. Chief Executive Leslie Moonves said the company will rake in nearly $5 million an episode with the sale of the show's reruns to Time Warner Inc.'s TNT channel, in addition to license fees paid by foreign broadcasters. Foreign revenue, he said, amounts to $2.5 million an episode.

Hawaiifiveo "This is only 'Hawaii Five-0''s first year and it’s already on its way to being another billion-dollar franchise for us, joining 'NCIS' and 'CSI,' which both remain strong on our network," Moonves said.

Broadcast license fees rarely cover the cost to produce a scripted show, so most TV series do not recognize a profit until the third or fourth season when rerun deals are traditionally negotiated. But in recent years, cable channels have been bidding on promising new network shows right out of the gate. That gives networks such as CBS a greater incentive to produce and own their content.

NBCUniversal's USA Network clinched a deal to buy reruns of "NCIS: Los Angeles" after just six original episodes had aired on CBS, Moonves said. TNT bought "Hawaii Five-O" half-way through the current TV season.

"Quality premium hours are very tough to come by and there’s a bidding war for these types of things," Moonves explained. "The marketplace is very strong both internationally, which continues to grow, as well as domestically.  If you have the right kind of [programs] that aren’t serialized, that have an action component, you can get these kind of numbers. So it’s a great business."

CBS posted revenue of $3.51 billion and net earnings of $202 million in the first quarter. The results surpassed expectations.

-- Meg James

Photo: "Hawaii Five-0" stars Alex O'Laughlin, left, and Scott Caan. Credit: Mario Perez / CBS 

TNT not talking about picking up 'Law & Order'

If NBC doesn't come up with enough cash to keep "Law & Order" creator Dick Wolf happy, don't be surprised if he tries to shop the 20-year-old show to the cable network TNT.

Time Warner's TNT is the logical choice for the show. It has been running repeats of "Law & Order" for years.

 But one should not automatically assume that means TNT will jump at the chance for original episodes. The cable network has plenty of original shows, including "Leverage," "The Closer," "Men of a Certain Age" and "Southland."

In a statement, TNT said: "Law & Order has been a valuable programming asset for TNT.  Currently, we have multiple seasons under license, up to and including Season 20. With this series, TNT is the buyer and NBC is the seller.  TNT is not in ongoing discussions about picking up the series for first-run episodes."

NBC was interested in bringing back "Law & Order," but it did not want a full season of the show or even 13 episodes. Part of the reason was the cost. Although most of the show's cast has proven to be replaceable, it is still expensive. Many of the costs are tied to Wolf's paycheck as a creator and executive producer. 

So far this season, "Law & Order" has been averaging under 8 million viewers. While the flagship series may be toast, "SVU" and a new spin-off set in Los Angeles are expected to be on NBC's air next season.

-- Joe Flint

'Without a Trace' was a costly bet for TNT

WOUTTRACE

TNT's slogan is "We Know Drama," but maybe the cable channel doesn't know drama as well as it thinks it does. On Wednesday, TNT parent Time Warner disclosed in its fourth-quarter report that TNT had to write down more than $100-million on its purchase of repeat rights to the old CBS crime show "Without a Trace."

The channel, which has had big success with its steady diet of "Law & Order" reruns, was not so lucky with "Without a Trace," a drama about the FBI's Missing Person Unit, that ran on CBS from 2002 through last year. TNT bought the reruns for the show, which starred Anthony LaPaglia, in 2003 for about $1.4 million per episode. The write-down was for $104 million.

While "Without a Trace" had some strong years on CBS, by the time the show made its rerun debut on TNT in 2004, it had already started to fade.

There is always a risk in buying reruns. Although some shows, such as "Law & Order," live on for years (or decades), others have a much shorter lifespan. In buying the rerun rights to "Without a Trace" so soon after it had premiered on CBS, TNT was betting that it too would have staying power.

TNT bought the show from its sister company Warner Bros., which no doubt bet right in selling reruns so soon after its network debut. When to sell a show is also complicated. CBS has already sold rerun rights to "NCIS Los Angeles" to USA for more than $2 million, even though the show is only in its first season.

Of course, sometimes it is better to wait. A&E got a big bargain by buying rights to the CBS hit "Criminal Minds" for less than $1 million per episode before that drama became the massive hit it is today.

-- Joe Flint

Photo: The cast of "Without a Trace," from left: Enrique Murciano, Poppy Montgomery, Anthony LaPaglia, Marianne Jean-Baptiste and Eric Close. Credit: CBS 

TNT's 'Men of a Certain Age' has solid opening

MENOFCERTAINAGE

The premiere of TNT's middle-age angst drama "Men of a Certain Age" hit a nerve, drawing a strong 5.4 million viewers to its Monday night premiere.

That's good news for the Time Warner-owned cable network. It recently canceled the drama "Raising the Bar," and another one of its dramas, "Saving Grace" is also ending.

"Men of a Certain Age," which stars Ray Romano, Andre Braugher and Scott Bakula, is something of a departure for the cable channel. It is a softer, more emotional drama; most of TNT's success has come from from police shows such as "The Closer" and "Dark Blue." The show, which has gotten mostly positive reviews, is somewhat dark, and while it's about men, it hit its loudest note with women, which made up the bulk of the audience. According to Nielsen, 63% of the adults 18-49 and 25-54 that tuned into "Men of a Certain Age" were women.

Of course, "Men of a Certain Age" also got help from a strong lead-in -- "The Closer" -- which had 6.2 million viewers.

TNT also used the premiere to start a heavy promotional push for "Southland," the John Wells drama that TNT picked up after NBC dropped it earlier this fall. TNT will be airing several new episodes of "Southland," and if the show performs, would likely order more.

TNT is coming off a tough fall, but so far this year its audience it has shown slight growth in viewers and key demographics.

-- Joe Flint

Photo: "Men of a Certain Age." Credit: Danny Feld

Cable vs. broadcast isn't a fair fight

CLOSER

In a mostly positive piece on the Time Warner-owned cable channel TNT in today's New York Times, Steve Koonin, president of Turner Entertainment Networks, said he views cable vs. broadcast as "David, as an industry, toppling Goliath."

Not to take anything away from Koonin, a smart and witty executive who has put some good shows on TBS and TNT (the latter of which is picking up the cop drama "Southland" after NBC dropped it) and revitalized TBS, but cable already is Goliath.

Let's look at the facts. Broadcast networks have one primary revenue stream -- advertising. A cable network has a dual revenue stream of advertising and subscriber fees. While advertising revenue depends on lots of factors, including how well a network is doing in the ratings and the economy, the subscriber fees that distributors pay only go in one direction: up. TNT currently gets almost $1 per-subscriber, per-month from cable and satellite operators, according to SNL Kagan, an industry consulting firm. TNT is in over 90 million homes. That translates to a lot of gravy.

KOONIN Now let's look at the expenses. TNT currently produces seven hours of original programming, including "The Closer" and usually orders 13 episodes per show. CBS, NBC and ABC produce more than twice that much (yes, we're counting Jay Leno too, it is a new show every night), and Fox produces about another 15 hours. The CW produces close to 10 hours a week. All order at least 13 episodes, and the goal is generally to have 22 or 24 episodes.By the way, we're only talking prime time programming here, those costs go way up when you throw in news and daytime and late night.

Sure, TNT buys a lot of sports too, but so do the broadcasters, and they're fighting with one arm tied behind their back. TNT uses its big ticket sports programming to further jack up the rates that its distributors pay to carry the network.

Most cable networks built themselves off of the reruns of broadcast TV (TNT spends heavily for "Law & Order" and other network dramas, TBS has "Friends" and "The Office" and other sitcoms). That got them audience and revenue to create original programming. Furthermore, those subscriber fees never seem to drop regardless of how a cable network is doing in the ratings. Now that's an industry to be in.

Ultimately cable and broadcast are two very different businesses. Until broadcasters figure out how to build a sustainable second revenue stream or distributors start rebelling against constantly rising cable programming costs, it is absurd to act like this is a fair fight. And frankly, both are facing much bigger challenges than each other. Finally, most big powerful cable networks are owned by the same five media conglomerates that own the broadcast networks, so let's just drop this whole idea of a battle. It's silly and passe.

Bottom line: Running a cable network is like being born on third base and thinking you hit a triple.

-- Joe Flint

Photo (top): Kyra Sedgwick in TNT's "The Closer." Credit: Andrew Eccles /TNT

Photo (bottom): Turner Broadcasting's Steve Koonin. Credit: Turner Broadcasting

TNT nearing deal for 'Southland,' but don't pop the champagne just yet

In Hollywood's worst-kept secret, Warner Bros. and TNT are putting the finishing touches on a deal to bring the dark cop drama "Southland" to the cable channel.

But whether this means "Southland," which NBC abruptly canceled earlier this month, is getting a new life or a temporary stay of execution won't be known until next year.

SOUTHLAND Under the terms being negotiated, TNT will buy the seven episodes that ran last spring as well as the six new episodes that Warner Bros. and John Wells Productions made for NBC. The show is not going back into production because TNT will decide whether to order additional episodes of "Southland" after it sees how the drama performs. The show isn't expected to make its cable debut until after the new year, and the new episodes might not run until late February or early March.

The deal comes a few weeks after NBC pulled the plug on "Southland," a decision that surprised Warner Bros. and John Wells. Last season, NBC ran the show in a 10 p.m. time slot, but this season it was moving the drama about Los Angeles beat cops to a 9 p.m. home because Jay Leno now occupies all of the network's 10 p.m. time slots.

Although NBC expressed support of the cop drama last spring, the tone of the show apparently got a little too grim for the network. But because the time slot change meant "Southland" would air at 8 p.m. in much of the country, NBC wanted to cut back on some of the violence and language. There was resistance from the Wells camp, however, and NBC ultimately decided to drop the show and replace it with "Dateline," which is much cheaper to produce. There has been speculation that cost was also a factor in NBC's decision to cancel "Southland" -- the network had to pay about $1.5 million in license fees per episode, people close to the program said.

Because Wells is one of Warner Bros. biggest producers and is responsible for "ER," which made boatloads of money for the studio, there was a real push to find a new home for "Southland."

TNT will likely schedule "Southland" at 10 p.m. We'll see how it does against Leno.

-- Joe Flint

Related posts:

Shopping "Southland"

Deciphering NBC's "Southland" move 

NBC axes "Southland"

Photo: A scene from "Southland."  Credit: Justin Lubin / NBC

TNT buys rights to 'Inglourious Basterds'; Weinstein Co. still struggling

Some good news for the beleaguered Weinstein Co. as it has sold the rights to "Inglourious Basterds" to Time Warner's basic cable network TNT.

BASTERDS

Though terms were not disclosed, typically these deals are based on a percentage of the box office with a cap, which means that a movie that makes $250 million at the box office could go for the same that a movie that pulls in $150 million does. The most TNT is likely to have paid for "Inglourious Basterds" is around $15 million. So far, "Inglourious Basterds" has taken in more than $110 million in U.S. box office, making it director Quentin Tarantino's biggest hit.

Showtime already has the pay TV rights to "Inglourious Basterds" and future Weinstein Co. releases. However, that deal was unique in that Weinstein Co. paid Showtime an advance of $35 million as part of the deal. For more on that arrangement and how it came to pass, see our story

Though the TNT money will come in handy, it is not nearly enough to dig the Weinstein Co. out of the hole it is in. Earlier this year, it hired financial firm Miller Buckfire to figure out how the company could restructure its heavy debt load of more than $500 million. Since then, the company has been laying off staffers, has said it will cutback dramatically on the number of movies it makes and acquires and has started getting out of its nonmovie businesses.

Today's Wall Street Journal was the latest to chronicle the challenges facing Bob and Harvey Weinstein after stories in the New York Times and Los Angeles Times. WSJ dug up a nice little gem that the Weinsteins did not pay back a $75-million bridge loan from Ziff Brothers Investments and that Dirk Ziff, resigned from the Weinstein board earlier this year.

The company has two big movies coming out later this year, the musical "Nine" and "The Road," the latter of which had been billed as its best shot at Oscar gold.

-- Joe Flint

Photo: "Inglourious Basterds." Credit: Francois Duhamel / Associated Press/Weinstein Co.

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