Time Warner: Upfront Iffy, 2Q Profits Dive 34%
Time Warner Chief Executive Jeff Bewkes told analysts Wednesday that Turner Broadcasting cable channels, led by TNT and TBS Superstation, are looking to take dollars away from broadcast networks in the upfront ad-selling season.
The upfront selling period is when TV advertisers buy around 75% of their commercial time for the upcoming TV season. "We'll take share from the broadcast networks," he said. "But the overall dollars [for Turner networks] will be down a bit as clients look for flexibility."
Still, he notes that advertisers plan to buy more commercial time during the upcoming season -- in the so-called scatter market periods. Bewkes did not go into details. "Clients are going to be paying for this flexibility," he said. "We do think that it could make the upfront a little less of an indicator for the health of the ad market than it usually is."
Overall, Bewkes said market conditions for all its media properties are improving somewhat: "The advertising markets where we operate have been more stable lately, but we aren't seeing major improvements."
Time Warner's improved second-quarter results came from TV operations -- Turner Broadcasting and HBO -- where overall revenue was up 5% to $3 billion, with subscription revenue climbing 8%. The one note was that TV advertising revenue from Turner networks dipped 3%.
Overall, networks' operating income climbed 17% to $875 million.
But lower results from DVD sales, magazine and the AOL divisions pulled down company results; second-quarter profits sank 34% to $519 million, with revenue down 9% to $6.8 million for the period.
A large piece of this came from its big Time Inc. publishing division, dropping 22% to $915 million. Magazine ad revenue continued to fall as in previous periods -- down 26%; with subscription revenue down 18%. Profit for the division plunged 53% to $102 million.
Its AOL division, soon to be spun off from Time Warner, also witnessed poor results, dropping 24% in revenue to $804 billion. Profit declined 28% to $165 million.
Filmed entertainment revenue sank 9% to $2.3 billion, with a big piece of this coming from weak DVD sales. In theater, the company has seen significant results from a strong slate of movies, including "The Hangover."
While revenue from filmed entertainment revenue sank, film profit climbed 52% to $143 million, due to much lower marketing expenses on film titles resulting from lower print and advertising costs.