Time Warner saw profits fall by 30% to $430 million last quarter as declines in film, publishing and CNN offset gains at the rest of Turner Broadcasting and HBO.
Chairman-CEO Jeff Bewkes put video providers on notice that the networks’ biggest renewal cycle in years is coming up from 2013 to 2016, and Time Warner is determined to get what it considers fair value.
“We will enter agreements with just about every distributor for just about all the networks,” he said on a conference call, and the company’s investment in programming and branding exceeds the rates it currently receives.
A number of channels have gone dark lately, including all the Viacom networks on DirecTV, in ever-thornier rate disputes between programmers and video suppliers that seem likely to continue.
TNT and TBS are in the midst of a turnaround, and HBO is rapidly ramping up international subscribers and showing muscle domestically. With “True Blood,” “Game of Thrones,” “Girls,” “Veep” and “The Newsroom,” the paybox is experiencing “some of the most favorable subscriber dynamics its seen in years,” Bewkes said.
CNN, which recently announced the departure of Jim Walton, its worldwide programming topper, is still lagging. “We are not satisfied with CNN’s rating performance, and we are focused on fixing it,” Bewkes said.
Time Warner’s total revenue fell 4% to $6.7 billion.
Networks, including Turner Broadcasting and HBO, posted a 4.7% boost in revenue. Subscription revenue rose 6% on higher domestic rates, international growth and an increase in HBO subscribers. Boosts at TBS and TNT, offset by declines at CNN, drove advertising growth of 2%.
Cable operating income surged 9% to $1.1 billion. Bewkes said the quarterly results “highlight the strength and potential of our networks and television production businesses, which generate the bulk of our revenues and earnings.”
The current year period included $147 million in charges from shuttering Turner’s general entertainment network Imagine in India and TNT operations in Turkey. Those division’s “weren’t on a path to succeed,” said CFO John Martin.
Filmed entertainment revenue fell 8% on tough comparisons from the year-earlier quarter, which included the theatrical release of “The Hangover Part II,” the home entertainment release of “Harry Potter and the Deathly Hallows Part 1” and the videogames “Mortal Kombat 9” and “LEGO Pirates of the Caribbean.” This year’s quarter fell short with “Rock of Ages” and “Dark Shadows,” although “Magic Mike,” released at the end of June, has outperformed, and “The Dark Knight Rises,” released this quarter, is doing blockbuster business. Execs are upbeat on “The Hobbit” trilogy.
Operating income fell 13% to $134 million.
It’s still hard times in print media. Revenue at publisher Time Inc. fell 9% to $858 million. Advertising revenue fell 7% and subscription revenue 13%. Publishing profit plunged 43% to $97 million.