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Time Warner's fourth-quarter results exceed expectations

February 09, 2012|By Ben Fritz, Los Angeles Times

Time Warner Inc. Chief Executive Jeff Bewkes touted his company's digital initiatives for television and film while 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 company was up 5% for 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 largely because of the DVD launch of "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. He also focused on digital initiatives, which will be key to the conglomerate's 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 said the company's HBO Go has been well received by customers but acknowledged that business disputes have caused delays in making it accessible by all subscribers. The on-demand service became available to Time Warner Cable and Cablevision subscribers only 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," Bewkes said.

He 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 flak for what some saw as a more complex system than 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 its thus-far-unsuccessful effort to impose the same delay on Redbox. He said it has had a positive effect on the studio's DVD sales.

Time Warner also announced that it would increase its quarterly cash dividend 11% to $1.04 per share.

The company's stock was up 1% to $38.65 in midday trading Wednesday.

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