Time Warner Returns to Profit

NEW YORK: Reporting strong results at its studio and networks divisions, Time Warner returned to profit in the fourth quarter, following its year-ago loss of $16 billion.

In Q4, the company reported improved revenues of $7.3 billion, with a net profit of $627 million. For the full year, meanwhile, revenues were down slightly to $25.8 billion, with a net profit of $2.5 billion, as compared with a year-ago loss of $13.4 billion.

“Time Warner achieved all of our goals in 2009," said Jeff Bewkes, the chairman and CEO. "We posted strong growth in adjusted EPS, despite the difficult economy. Our studio and networks achieved record profits, while investing even more in programming and production. We spun off both Time Warner Cable and AOL, enabling us to focus all our resources on creating and distributing the highest quality and most popular content. At the same time, we meaningfully strengthened our balance sheet, while returning more than $2 billion to our stockholders in dividends and share repurchases.”

Bewkes continued: “We’ll build on this foundation in 2010 by continuing to leverage our brands and scale to make the most compelling content, improve our efficiency, expand internationally and accelerate the digital transition in our businesses. To help evolve new business models that enhance our profitability and extend our brands, we’re leading such industry-wide initiatives as ‘TV Everywhere’ and a digital storefront to provide magazine and other content for portable digital devices. Reflecting our confidence going into 2010, our board voted to raise our regular quarterly dividend and authorized an increase in our stock repurchase program.”

In the Networks segment, which includes Turner Broadcasting and HBO, revenues rose 5 percent in the year to $11.7 billion, due primarily to 10-percent growth in subscription revenues. This gain was partially offset by declines of 3 percent in ad revenues, mostly from Turner’s news networks, and 10 percent in content revenues, due to lower ancillary sales of HBO original programming. Operating income grew 14 percent to $3.5 billion in the year. In the quarter, meanwhile, revenues were up by 4 percent to $3.1 billion, due to an 11-percent increase in subscription revenues, in part offset by a 22-percent decline in content revenues and a 4-percent decline in advertising revenues. Operating income increased 32 percent to $772 million.

At Warner Bros., revenues for the year were down 3 percent to $11.1 billion, due to fewer home video releases and television syndication availabilities and lower video catalogue performance, but operating income increased 32 percent to $1.1 billion. The Q4 revenues rose 7 percent to $3.3 billion, led by a strong theatrical release slate, including The Blind Side and Sherlock Holmes, higher home video revenues from the performances of Harry Potter and the Half-Blood Prince and The Hangover, and growth in video games such as LEGO Indiana Jones 2: The Adventure Continues. Operating income grew 61 percent to $436 million.