CEO Jeff Bewkes hints at potential deals

Time Warner CEO Jeff Bewkes said an acquisition of MGM “could make good sense” at the right price — the latest media chief to signal potential acquisitions on the horizon as companies loosen their purse strings after hunkering down to weather a two-year economic slump.

In the media world at least, brighter days are here. Advertising, consumer spending and corporate profits are up. Bewkes, after reporting a big boost in earnings, said he has $5 billion in cash to play with. Rupert Murdoch’s News Corp. has $8 billion, and both are looking for ways to spend the dough.

Bewkes also said ratings-challenged CNN is talking with cash-strapped broadcast networks including CBS to form a news alliance and “there’s no particular obstacle to doing anything that makes sense.”

“We have long been in discussions with, really, all of the candidates,” Bewkes told investors during a conference call Wednesday to discuss first-quarter earnings.

Time Warner’s net profit rose 10% to $725 million for the three months ended in March.

Revenue of $6.3 billion was up 5% — the company’s biggest gain in nearly two years.

An advertising recovery benefited both Turner Broadcasting and publisher Time Inc. The continued popularity of “The Blind Side” and “Sherlock Holmes” buoyed Warner Home Video, the company said.

Turner and HBO, which make up the networks segment, saw revenue rise 9% to $3 billion.

Operating income jumped 28% to $1.2 billion.

The gains came as subscription revenues rose $131 million, or 7%. Ad revenue grew 9%, or $67 million. Content revenue was up 22%, by $46 million.

The growth in subscription sales resulted primarily from higher rates at Turner and HBO, international growth and expansion, including the consolidation of HBO Central Europe.

Ad revenue benefited primarily from growth at Turner’s domestic entertainment networks, related mainly to strong scatter pricing — partly offset by a decrease at the news networks.

Content got a boost from higher ancillary sales of HBO original programming, including the domestic basic cable television sale of “Entourage” and higher licensing revenues at Turner.

TNT and TBS networks both ranked among the top three ad-supported cable nets in primetime for adults 18-49 and 25-54 for the quarter.

In April, Turner joined with CBS in a 14-year pact for the exclusive U.S. TV, Internet and wireless rights to the NCAA’s Division I men’s basketball tournament beginning in 2011. And last month, Turner signed Conan O’Brien to host a latenight talkshow on TBS.

Bewkes acknowledged that he’s not pleased with CNN’s ratings but said the network has broad reach and solid financials. “We need to make our broadcast more compelling,” he said.

A venture with a traditional new network has long been anticipated. It makes more sense now than ever since CNN has a sweeping international footprint, while broadcast news divisions have been cutting to the bone. ABC News recently cut 20% of its workforce.

At Warner Bros., revenue rose 2% to $2.7 billion reflecting more and better-performing homevideos than the year-earlier quarter. Ten titles were released this year vs. five last year. That was partly offset by lower TV licensing fees due to the timing and mix of network deliveries versus the first quarter of 2009.

Operating income at the studio surged 43% to $307 million, helped in part by lower restructuring costs year-on-year.

Warner Bros. Home Entertainment reached agreements with Netflix and Redbox to make Warner Bros. new DVD and Blu-ray titles available to their customers after a 28-day window.

As for MGM, Time Warner had about $5 billion in cash at the end of March and is evaluating various ways to use it. If the Lion fits the bill, “we’re not averse to putting some of that capital to work,” Bewkes said.

Earlier this week, Rupert Murdoch indicated that News Corp. is looking to spend some of the $8 billion of cash on its books. Murdoch, when asked about acquiring MGM, said: “We could be tempted if something real came on the market, but we don’t consider MGM in that class — particularly at the prices they’re talking about.”

Bewkes touted the studio’s upcoming slate, which includes “Sex and the City 2,” “Harry Potter and the Deathly Hallows: Part I” and “Legend of the Guardians: The Owls of Ga’Hoole.”

In what could be a very positive sign for print journalism, magazine publisher Time Inc., battered in recent years by a sharp downturn in advertising, swung to the black. The division posted a $50 million profit from a $32 million loss the year before, partly on cost savings and lower marketing and pension expenses.

Revenue dipped 1% to $799 million.

But advertising revenue rose 5%, by $18 million. Overall subscription revenue edged up 2% by $5 million.

The company said higher domestic print magazine and online ad revenues were offset in part by the impact of the sale of Southern Living at Home in the third quarter of 2009.

Execs noted strength at People, Entertainment Weekly and InStyle. Trends at lifestyle and news magazines also improved, with results up modestly. Print advertising trends are looking positive into the second quarter, said chief financial officer John Martin.

Time Warner noted that in January its board of directors increased the amount remaining on the company’s common stock repurchase program to $3 billion. From Jan. 1 through April 30, the company repurchased approximately 22 million shares of common stock for appr oximately $666 million.

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