Time Warner's cable networks' upfront advertising revenue will probably be down for the current upfront selling period, according to company officials. But future quarterly scatter selling periods may improve overall TV ad yearly results. 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.
Wall Street doesn't like what it sees concerning Meredith Corp. -- stemming from a fiscal fourth-quarter loss of $164 million, sharply down from a year ago. The company's stock has dropped a big 12% in mid-day trading. Meredith Corp., the magazine and TV company, also witnessed revenue sink $346 million from $376 million. Meredith says advertising will continue to be impacted by the recession in 2010. The company was hit with two special charges in the fourth quarter: a $295 million "impairment charge" related to its FCC TV licenses and goodwill that Meredith says will not impact its future operations. The second charge was $5.5 million, due to employee severance stemming from an earlier announced decision to restructure some of its operations. Separate from this, the ongoing recession continues to hurt the company for its entire fiscal 2009 period -- down to $787 million in advertising revenues from $931 million. For the second half of the year, magazine advertising declined 12% from the prior-year period, and 18% from the first half of the year. Better news came from online advertising, growing 7% in the second half of the year and 14% in the first half. Broadcast advertising trends were similar to its magazine group -- down 17% for all of 2009. Lower automotive advertising continues to affect results. Publishing revenues in the fourth quarter slipped to $283 million from $297 million; advertising revenues dropped from $148 million to $134 million. Net profit in its fourth quarter grew to $46 million, compared to $25 million for its publishing operation. For the year overall, profit sank to $151 million from $188 million. The group's broadcasting results had an operating loss in the fourth quarter -- including special charges -- at $292 million, compared to operating profit of $18 million. Fourth-quarter revenues were $62 million against $79 million. For the entire year, broadcasting, including special charges, had a $258 million loss, compared to profit of $78 million in the prior-year period. Automotive advertising, its biggest ad category, continued to drag down results in its broadcasting operations -- declining 55% in the fourth quarter and 45% for the year overall.
Consumer magazine publishers continued to take a beating in the second quarter of 2009, with Martha Stewart Living Omnimedia and McGraw Hill, publisher of BusinessWeek, both reporting big declines in publishing ad revenue. Worse, executives held out little hope of a turnaround in print advertising in the second half of 2009. Martha Stewart Living Omnimedia's total revenues fell 26%, from $77.1 million in the second quarter of 2008 to $57 million this year. This was due, in large part, to a 28% decline in publishing revenues, from $46.2 million to $33.5 million, the bulk of this in advertising. Circulation revenues also dropped 22%. MSLO broadcasting revenues declined, albeit more modestly, with a 9% drop from $11.3 million to $10.3 million, which the company attributed to a small ratings decrease. Merchandising, the third pillar of MSLO's business, saw revenues tumble 45% from $16.2 million to $9 million, mostly due to the winding down of its deal with Kmart. The one positive note was Internet revenues, which jumped 28% from $3.2 million to $4.1 million, as page views increased 59% compared to the second quarter of 2008. McGraw Hill reported that second-quarter revenues in its business-to-business magazine publishing business (which includes BusinessWeek, Construction Week, Aviation Week) fell 10.2% to $216 million. The percentage decline at BusinessWeek may have been greater, however, as ad pages declined 34.3% in the second quarter according to the Publishers Information Bureau. ______________________________________________________________________
Everyone in the magazine business knows that behind closed doors, many big publishers give substantial discounts to media buyers off their official rate cards, but no publisher will actually admit to it, for fear of further devaluing their inventory. But with a little back-of-the-envelope math, you can still figure out the average discounts granted by publicly traded companies that have to give updates on their financial performance every quarter. Following are comparisons of second-quarter rate card figures and actual ad revenue figures for Time Inc., Meredith Corp., Martha Stewart Living Omnimedia, and McGraw Hill, the publisher of BusinessWeek. According to Time Warner's second-quarter earnings announcement, Time Inc. took in total ad revenues of $472 million, of which perhaps 10% ($47 million) was from online operations, leaving $425 million in print ad revenue. That's compared to $966 million in official rate card revenues reported by the Publishers Information Bureau for 22 titles from All You to Time, suggesting that -- on average -- Time Inc.'s magazines are giving discounts of 56%. The average discounts are even bigger at Meredith Corp., publisher of titles like Better Homes & Gardens, Ladies' Home Journal and More. Although it's hard to know what discounts are being granted by individual titles, overall, the official rate card revenues for 14 Meredith titles totaled $628 million, according to PIB. But the company reported actual publishing advertising revenues of just $134 million, of which perhaps 7% or $9 million came from online, leaving a total $125 million in print ad revenues. This suggests an average discount of 80% from Meredith's official rate card figures. At Martha Stewart Living, total second-quarter publishing totaled $33.5 million, of which around $10 million probably came from circulation, including subscriptions and newsstand revenues. (Specific figures are not available for these, but first-quarter subs and newsstand sales totaled $12.6 million.) That leaves $23.5 million coming from print ad revenues. Compared to official rate card revenue figures of $65.4 million for four magazines, including Martha Stewart Living and Everyday Food, that suggests an average discount across MSLO titles of 64%. Finally, McGraw-Hill is telling prospective buyers that BusinessWeek is on course to take in a total $135 million in revenues in 2009, equaling about $33.7 million per quarter. (In 2007-2008, the second quarter accounted for about 25% of the total year's revenues.) Subtracting subscription revenues of $8.5 million -- presuming 850,000 subs, with an average cost per issue of $0.77 and 12 issues in the quarter -- and newsstand sales of $2 million, based on ABC figures from the second half of 2008, that leaves about $23.3 million of actual print ad revenue. Compared to official rate card revenues of $43.9 million reported by PIB, this suggests an average discount of 47%.
Nielsen said Wednesday that the proliferation of online TV content is "not necessarily" the reason that more than 1 million homes have yet to make the digital transition. On July 12 -- a month after the switchover date -- 60% of homes were still unprepared and had no Internet access. The latest figures show that 99% of U.S. homes can receive digital signals -- although there have been reports of households having switched that are still unable to receive some channels, particularly in rural areas. Overall, 1.2 million homes have yet to transition. About half earn less than $25,000 a year, Nielsen said. Since the transition, the number of homes making the switch has been steady -- with a gain of 229,000 in the last two weeks, bringing the number of switched homes to just about 99%. Just about all homes with older adults -- over 99% -- have switched, while the figure stands at 2.7% for dwellings where the head of household is under 35. The latter is the group most likely to decide there is enough video content on the Web to avoid traditional TV.
Verizon's FiOS telco TV service is taking customers away from cable companies; now, the telecom giant is using its partnership with satellite operator DirecTV to potentially lure more. It is offering new customers a triple-play package that includes DirecTV's NFL Sunday Ticket package free for the coming season. Customers do have to agree to a Verizon deal for a year that includes a certain high-speed Internet service and DirecTV for two. The triple play includes phone, Internet and TV. Bundling the three has been a boon to cable operators. One version of the Verizon/DirecTV package -- for $120 a month after a rebate -- includes Showtime free and a DirecTV HD DVR service. The Sunday Ticket package, which offers every NFL game each Sunday, is valued at $300 a month. New customers who sign up for versions of the package also get a free Compaq netbook or Flip camcorder. That offer has been in place for more than a month. The Sunday Ticket deal is in markets where Verizon does not offer FiOS.