Time Warner CEO Jeff Bewkes expressed bewilderment Wednesday about what’s going on at MGM, the debt-laden film studio that spurned a takeover offer from his company in March.
MGM is “going off in a different direction,” Bewkes said during a quarterly earnings conference call, “and it looks pretty inept to us.”
The Lion has struggled to avoid bankruptcy after running up $4 billion in debt. Its lenders continue to give the studio extensions on the deadline for debt payments.
Bewkes said that when Time Warner made its bid, reportedly about $1.5 billion, it was based on information it had on the studio at the time, but since then it has not been invited into a “more constructive process” with MGM to “confirm what the value of MGM is.” That was all Bewkes had to say on the subject.
As for Time Warner’s second quarter earnings, Turner Broadcasting continued to be a major driver of growth, with the conglom reporting that ad revenues grew 14% at the unit on the strength of original shows. Turner’s slate also “helped to generate pricing gains at the high end of the recent 2010-11 upfront,” Bewkes said.
“Memphis Beat,” starring Jason Lee, opened well in the second quarter. Looking ahead, Bewkes said buyers are paying advertising prices on parity with broadcast for the Conan O’Brien latenight show, set to debut this fall on TBS.
Overall, Time Warner’s revenues grew 8% in the second quarter to $6.4 billion vs. the year-ago period. Operating profits were up 19% to $1.2 billion.
Advertising revenues for the entire company rose 11%, and even its publishing business, Time Inc., which has suffered in the downturn, saw its ad revenues grow by 4%.
At Warner Bros., revenues were up 8% to $2.5 billion, helped by “Clash of the Titans”and higher licensing fees for Warner-produced TV shows such as “The Closer.” Videogame revenues, too, helped the top line, largely on the release of “Lego Harry Potter: Years 1-4,” which has sold 3 million units so far.
Bewkes said HBO saw higher subscription rates in the U.S., and its revenues got a lift from DVD sales of “The Pacific” and “True Blood.” HBO, Bewkes added, has more original shows in development than at any time previously. “True Blood” continues to be one of the network’s biggest hits ever, said Bewkes, drawing an average of 13 million viewers per episode, comparable to the final season of “The Sopranos.”
Asked about HBO’s new broadband streaming service HBO Go and if it would be made available to non-HBO subscribers, Bewkes said it would not — for now.
“We really need to support the economic infrastructure of online video and ISP delivery,” he said.
Bewkes did take a jab at Comcast, saying that he thought the HBO Go interface was superior to Comcast’s video portal, Fancast, through which HBO shows are now streamed.
On the broadcast nets getting paid by pay TV distributors in new, lucrative retrans deals, Bewkes said he was pleased for them.
“We are happy to see broadcast revitalized,” he said, mostly because it is good for Warner Bros., which supplies a lot of shows to broadcast networks, and for the syndication market in which TNT and TBS are big players.
Time Warner also returned to its investors $1.5 billion through the end of June, either through dividends or share repurchasing. The earnings were announced prior to the market opening in the U.S.