Time Warner tumbles 14%

Chris Forrester

“It could have been worse,” said one commentator, talking about Time Warner’s massive 14% fall in net income. Thankfully, as far as the video and film side of the media giant’s empire was concerned, much of the Q1/2009 collapse was down to old-fashioned print (Time magazine, down a massive 30%) and new-fangled AOL, both of which saw a seemingly never-ending flow of red-ink.

AOL is likely to be spun-off, and thereby stand – or fall – on its own feet. Time Warner confirmed the move April 30, but admitted that the spin-off might take several months. AOL saw ad-sales fall 20%, and subs revenues collapse 27%.

But what was worse about CEO Jeff Bewkes conference call was his candid admission that this was one recession where normality might never be recovered. “We aren't assuming that this is all cyclical and will automatically come back when the economy turns," he said. "There will probably be a further shakeout."

Bewkes said the Time publishing division was “exploring all its options” which sounded ominous. Movie revenues were also down but by a much more respectable 7% and accepted as being due to release patterns more than any market depression.

Time Warner’s networks division, which includes HBO and Turner Broadcasting, saw profits rise 11% to $1.1bn, although the outlook for 2009 is – at best “flat”.

“Revenues climbed 6% ($149m) to $2.8bn, with growth of 9% ($155m) in Subscription revenues, offset partially by a decline of 2% ($16m) in Advertising revenues,” said T-W’s statement. “Subscription revenues benefited primarily from higher rates at both Turner and HBO and the impact of the consolidation of HBO Latin America Group. Advertising revenues decreased, reflecting mainly declines at Turner’s international networks, due in part to the impact of unfavorable foreign exchange rates, and a slight decline at its domestic entertainment networks, reflecting weakened demand.”