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Time Warner Revenue Is Flat, Despite Cable Gains

May 1, 2013 by Leave a Comment

The parent company of HBO, CNN, TNT and TBS reported revenue of $6.9 billion in the quarter that ended March 31, down 1 percent from the same period last year. Net income grew 23.5 percent to $720 million, or 75 cents a share, compared with $583 million and 59 cents a share in 2012.

“We’re off to a strong start in 2013, making us even more confident in our full-year outlook,” Jeffrey L. Bewkes, chairman and chief executive of Time Warner, told analysts. He specifically pointed to the success of the company’s cable TV business, driven this quarter by an average nightly audience of 10.7 million for the N.C.A.A. basketball tournament broadcast on several Turner channels.

But Time Warner’s legacy businesses continued to lag. Later this year, the company is expected to complete the spinoff of its Time Inc. publishing unit into a separate, publicly traded company. Revenue at Time Inc., which publishes Time, People, Sports Illustrated and InStyle, fell 5 percent to $737 million, reflecting an 11 percent dip in subscription revenues.

Time Inc. eliminated roughly 6 percent of its total worldwide staff of 8,000 in the first quarter, resulting in $53 million in restructuring and severance charges. “We remain very focused on taking costs out of the business,” said John K. Martin, chief financial and administrative officer at Time Warner. Cost cutting, he added, is “an important step in preparing Time Inc. to function as a stand-alone public company.’’

Revenues at the Warner Brothers studio fell 4 percent to $2.7 billion, while operating income increased by 23 percent to $263 million. “Both ‘Gangster Squad’ and ‘Jack the Giant Slayer’ fell below our expectations,” Mr. Bewkes said.

He remained optimistic about the studio’s slate of upcoming films, including “The Great Gatsby” and “The Hangover Part III.” Warner Brothers had a strong television season with “Revolution,” an apocalyptic drama on NBC, and “Game of Thrones,” the HBO fantasy series that averages 13.4 million viewers per episode.

Mr. Bewkes defended CNN under the leadership of Jeff Zucker, the recently named president of CNN Worldwide. But, he said, the channel still needed to evolve from a trusted source of breaking news to a more regularly watched outlet. “CNN can’t just be politics and wars,” Mr. Bewkes said.

He rebuffed questions about whether the HBO Go on-demand app would be made available on an à la carte basis through a broadband connection, making the premium cable channel more like the streaming service Netflix. “We would do it if we thought it was in our economic best interest,” Mr. Bewkes said. “At this point, we don’t think it makes sense.”

Article source: http://www.nytimes.com/2013/05/02/business/media/time-warner-revenue-is-flat-despite-cable-gains.html?partner=rss&emc=rss

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Time Warner’s Spinoff Plan Returns to Basics

March 8, 2013 by Leave a Comment

With the confirmation on Wednesday that it would spin off its Time Inc. magazine division, Time Warner, once a colossus that included dominant cable and Internet companies, a book publisher and music unit, completed an evolution over several years into a pure cable television and movie production company.

The author of much of this transformation is Mr. Bewkes, himself a product of the company’s cable television division, who as chief executive has overseen the spinoffs of AOL and Time Warner Cable (the Warner Music Group and the Time Warner Book Group were shed before he was chief).

The strategy highlights Mr. Bewkes’s confidence in its high-margin cable channels like TNT, TBS and HBO, which brought in $3.67 billion in revenue in the most recent quarter. The latest spinoff also is an example of a philosophical shift in the media industry away from rapid acquisition and growth. It addresses the lingering fallout of the company’s recent corporate marriages (most notably AOL’s $103.5 billion acquisition of Time Warner in 2000) that ended badly, becoming case studies in M.B.A. programs on how not to run a company.

“This follows a long evolution of Time Warner from a decade ago, shrinking down to its core TV and film assets,” Benjamin Swinburne, a media analyst at Morgan Stanley, wrote in a recent report titled “Time Warner Inc.: The Final Spin.”

In an interview Mr. Bewkes said he did not set out to slim down the company. The spinoffs of Time Warner Cable and AOL, he added, provided additional value to shareholders and allowed Time Warner to more than double its earnings in the last five years. “The reason is those core assets” of cable channels and the Warner Brothers studio, he said.

He rejected the idea that Time Warner no longer wanted to own Time Inc. and magazines like People, InStyle and Sports Illustrated. The split will give Time Warner investors shares in Time Inc., though details have not yet been disclosed.

“We own it. Every one of us still owns it,” Mr. Bewkes said. “It’s just a separate piece of paper so it can have stronger equity return.”

That piece of paper, though, will contain the magazine that was the foundation for the modern company. Assembled in 1990 with the merger of Time Inc. and Warner Communications, Time Warner has in its history the storied dealmaker Ross, a former chief executive who also owned parking lots and funeral homes.

Time Inc., while profitable, had for the last several years stood out as the company’s weak spot. Time Warner’s walking away from a potential deal with the Meredith Corporation and the hurried announcement of the Time Inc. spinoff signaled to some inside the publishing company that its parent cared more about investors than the future of its celebrated magazines.

“Journalists are a prickly bunch of folks, and they managed to upset all of them,” said Michael W. Robinson, executive vice president of Levick, a Washington-based crisis communications firm.

The deal that would have spun off some of Time Inc.’s magazines into a separate company with Meredith was always the company’s “second choice,” said a person involved in the negotiations who would discuss them only privately.

Mr. Bewkes said he never wanted to sell Time Inc. “We have never, ever considered or discussed with anyone selling any of our magazines ever,” he said.

The spinoff strategy has made Mr. Bewkes popular on Wall Street. “Jeff in particular is reflective of a new style of management versus the folks who put these companies together,” said Douglas Mitchelson, a media analyst at Deutsche Bank. In the past, he added, it “was very difficult for media C.E.O.’s to take on what is essentially a shrinking of their power base.”

But Mr. Bewkes has company. Rupert Murdoch is preparing News Corporation for a split. Sluggish newspapers like The New York Post will soon form a separate entity from News Corporation’s profitable cable channels like Fox News and FX. And in 2006, Sumner M. Redstone split his companies, Viacom and the CBS Corporation.

“They’re starting to look a lot more like us,” a Viacom executive who would discuss the competition only anonymously said of Time Warner.

Article source: http://www.nytimes.com/2013/03/08/business/media/time-warners-spinoff-plan-returns-to-basics.html?partner=rss&emc=rss

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Media Decoder: Time Warner Announces Spinoff of Magazines

March 7, 2013 by Leave a Comment

Correction Appended

Time Warner’s magazines include Sports Illustrated and People.Mario Tama/Getty Images Time Warner’s magazines include Sports Illustrated and People.

9:14 p.m. | Updated What do you do with a group of celebrated magazines that no one seems to want?

Time Warner found its answer on Wednesday. It announced it would spin off its Time Inc. magazine unit into a separate, publicly traded company, a move that will allow the media conglomerate to focus entirely on its cable television and film businesses.

The announcement came hours after Time Warner and Meredith Corporation ended negotiations on a proposal that would have joined in a separate company many Time Inc. titles with magazines published by Meredith.

Laura Lang, the chief executive of Time Inc. who started the job just over a year ago, said she would depart once the spinoff of the magazine division was complete.

The deal with Meredith fell apart in part because of Time Warner’s concern over the fate of four of Time Inc.’s famous but struggling magazines — Time, Sports Illustrated, Fortune and Money, according to three people with knowledge of the negotiations who could not publicly discuss private conversations. At one point Meredith expressed some interest in the news and sports magazines, but Meredith decided not to pursue them because such a deal would have diluted its controlling family’s shares in the new company, another person with knowledge of the negotiations said. If Time Warner retained those four titles, the economics of a full spinoff proved more appealing, this person said.

Time Inc. is the nation’s largest magazine publisher, and the revelation last month that it was in talks to sell off many of its titles was viewed as another clear sign that the industry was buckling under intense financial pressures. The breakdown in talks threw into sharp relief how once-glamorous magazines like Time and Sports Illustrated have become troubled assets, with Time Warner wanting to shed them and Meredith not wanting them.

Time Inc., suffering from industrywide declines, has consistently lagged in Time Warner’s quarterly earnings. In the three months that ended Dec. 31, revenue at Time Inc. fell 7 percent to $967 million. In the same period, revenue at the company’s cable television channels, including TNT, TBS and HBO, grew 5 percent to $3.67 billion.

In a statement late Wednesday, Jeffrey L. Bewkes, chairman and chief executive of Time Warner, said a complete spinoff would provide clarity for the company as it concentrated on its high-growth businesses, primarily in cable television.

Jeffrey L. Bewkes, chairman and chief executive of Time Warner, said a spinoff would provide clarity for the company.Brian Snyder/Reuters Jeffrey L. Bewkes, chairman and chief executive of Time Warner, said a spinoff would provide clarity for the company.

“After a thorough review of options, we believe that a separation will better position both Time Warner and Time Inc.,” Mr. Bewkes said. “Time Inc. will also benefit from the flexibility and focus of being a stand-alone company,” he added.

Meredith’s prevailing interest in a deal had been to put together what would have essentially been a women’s magazine publisher. The new entity would have combined its National Media Group, which includes stalwarts like Ladies’ Home Journal and Better Homes and Gardens, with Time Inc.’s Lifestyle and Style Entertainment brands, which include People and InStyle.

Meredith executives had wavered in their interest in Time, Fortune, Money and Sports Illustrated, the people with knowledge of the negotiations said. Time Warner originally planned to keep them, citing news-gathering synergies with the company’s CNN channel, but that thinking changed. Time Warner executives walked away from the deal, believing they would be better off spinning off all of Time Inc.’s magazines without Meredith.

”We respect Time Warner’s decision and certainly remain open to continuing a dialogue on how our companies might work together,” said Stephen M. Lacy, Meredith’s chairman and chief executive.

The new company would have borrowed money to pay a one-time dividend of around $1.75 billion back to Time Warner.

Another sticking point in the negotiations was over which company would have ownership of Time Inc.’s London-based property, IPC Media, which publishes a mix of general-interest and upmarket titles like InStyle, Country Life and Decanter. IPC also includes an advertising business and a news trade and sales distribution company called Marketforce.

Founded by Edwin Thomas Meredith in 1902 with the publication of Successful Farming magazine, Meredith, based in Des Moines, Iowa, has always been a folksy, domestic company with strong Midwestern roots. Acquiring Time Inc.’s international business would have made for an odd pairing.

Time Inc. would be only the latest asset Time Warner has shed as it has evolved into a cable television and movie production company. Once a corporate giant, in recent years Time Warner has divested itself of AOL, Time Warner Cable, the Warner Music Group and the Time Warner Book Group.

Publishing divisions have been financial drags on other media companies as well. This summer, News Corporation is expected to complete a split of its publishing assets, including The Wall Street Journal, The New York Post and HarperCollins, into a separate, publicly traded company. The cable channels FX and Fox News and the 20th Century studios will remain in a company called Fox Group.

Ms. Lang, the former chief executive of Digitas, a digital advertising firm, took over at Time Inc. at a tumultuous time. The company had a nine-month leadership vacuum after the departure of its previous chief executive, Jack Griffin, a former Meredith executive who clashed with the culture of Time Inc.

Shortly after she was hired Ms. Lang brought on Bain Company, a Boston consulting firm, to help her turn the company around. She moved quickly to strike a deal that made all of its magazines available via Apple’s newsstand. But her efforts were not enough to stem the industrywide declines in subscription and advertising revenue.

Revenue at Time Inc. has declined by around 30 percent over the past five years. Last month, Time Inc. said it would lay off 6 percent of its 8,000 employees, which will cost Time Warner $60 million in restructuring.

Christine Haughney and Michael J. de la Merced contributed reporting.

Correction: March 7, 2013

An earlier version of this article misstated the name of Meredith’s founder. He was Edwin Thomas Meredith, not Edwin Thomas.

Article source: http://mediadecoder.blogs.nytimes.com/2013/03/06/fate-of-four-time-inc-magazines-are-an-issue-in-talks-with-meredith/?partner=rss&emc=rss

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Media Decoder Blog: The Breakfast Meeting: A Bid to Privatize Barnes & Noble Stores, and a Magazine Merger’s Culture Clash

February 27, 2013 by Leave a Comment

Leonard S. Riggio, Barnes Noble’s 71-year-old chairman, is preparing a bid to buy the company’s 689 stores that would save them from a risky future in public markets, Michael J. de la Merced writes. The move would effectively separate the retail arm from Nook Media, the company’s struggling e-book division, although it seems probable that Nook devices would still be featured in the stores. Analysts thought the deal made sense only if Mr. Riggio paid a low price for the legacy stores, which analysts valued between $484.5 million to more than $1 billion. Investors appeared sanguine Monday, as Barnes Noble shares jumped 11.5 percent, to $15.06.

As details emerge of the union of some Time Inc. magazines and Meredith Corporation, employees at both companies are concerned about the difficulties of combining two starkly different corporate cultures, Christine Haughney reports. Time is famously hierarchical and lavish with expenditures, while Meredith is more personable and prudent about spending. The last time the two cultures combined, when Jack Griffin took control of Time Inc. after a stint at Meredith, things did not work out (Mr. Griffin lasted six months). This merger may go more smoothly because flagship Time Inc. titles, like Time, Sports Illustrated and Fortune, are not part of the deal.

Distillers, rejoice, Stuart Elliott advises: a commercial for Baileys Irish Cream liqueur, sold by Diageo, is believed to be the first for a national spirits brand to appear during the Academy Awards. Makers of distilled spirits voluntarily avoided television for decades, but that changed starting with a Crown Royal advertisement in 1996. Networks are still cautious about airing liquor commercials, and tend to broadcast them at night and not during big events like the Super Bowl. Some other highlights from the broadcast included a series of Samsung ads culminating with an uncharacteristically squeamish Tim Burton and an action-packed update to Grey Poupon’s “Pardon me” campaign.

Craig Zadan and Neil Meron, who produced the Academy Awards broadcast, and Seth MacFarlane, who was the host, were excoriated by some members of the Academy and others for a broadcast that was criticized for crossing the line from irreverent to offensive, Michael Cieply and Brooks Barnes write. The show attracted a bigger audience, 40.3 million viewers compared with last year’s 9.3 million, and ratings up 3 percent. Mr. MacFarlane was castigated by the Anti-Defamation League, but fellow comedians proved more understanding.

The New York Times Company said on Monday that The International Herald Tribune would be renamed The International New York Times to focus on the company’s core brand, Christine Haughney and Eric Pfanner report. The name change would be coupled with a Web site redesign for international audiences. Mark Thompson, the president and chief executive of the Times Company, said in a statement that the change would help take advantage of “significant potential to grow the number of New York Times subscribers outside of the United States.”

The British Broadcasting Corporation said it and other news organizations would oppose a British government effort to limit information disclosed to an investigation into the death of Alexander V. Litvinenko, a former K.G.B. officer who died of radiation poisoning in 2006, Alan Cowell writes. The BBC reported that the government had planned to apply for a Public Interest Immunity certificate, usually issued on grounds of national security. Mr. Litvinenko, who ingested a rare radioactive isotope at the Pine Bar of the Millennium Hotel in central London, said that he thought the Russian government had poisoned him for working with British and Spanish intelligence agencies. His wife, Marina, also opposes limiting information, and a lawyer representing her said that British agencies did not do enough to protect Mr. Litvinenko.

Article source: http://mediadecoder.blogs.nytimes.com/2013/02/26/the-breakfast-meeting-a-bid-to-privatize-barnes-noble-stores-and-a-magazine-mergers-culture-clash/?partner=rss&emc=rss

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