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Time Warner News Is Good--Except CNN - Broadcasting & Cable

Time Warner News Is Good--Except CNN

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Time Warner’s earnings announcement Wednesday exceeded expectations and drove the company’s stock up $2.79 to $35.10. Just about the one cloud on the company’s horizon was the performance of CNN.

At a time when the advertising market is booming, CEO Jeff Bewkes crowed on the company’s fourth quarter conference call that organic ad revenue growth at the company’s domestic entertainment networks was in the high teens.

But when CFO John Martin provided additional details, he said that “domestic entertainment networks, together with kids and young adults, grew advertising strong double digits in the quarter, and that was offset by mid-single-digit declines at domestic news”

That was the last mention of CNN, whose viewership among adults 25 to 54 in primetime fell 34% in the quarter, in an otherwise upbeat call.

Signs point to more ad growth ahead. “Domestic scatter pricing remains very strong, up solid double digits over the upfront,” Martin said.  “And cancellations have remained extremely low, which is yet another positive sign as we enter the New Year.”

Martin added that Time Warner made a $70 million pre-payment to the NCAA for rights to televise, along with CBS, college basketball’s March Madness. “We’re actually more enthusiastic about the deal now than when we signed it,” he said, with both CBS’ cooperation and ad sales exceeding expectations. He added that with its high price tag, the NCAA will be a “modest drag” on profitability in 2011, but “we expect it to be very profitable for us in the coming years and we fully expect it to be a key growth driver over the long term”.

With the economy improving and Time Warner’s financial condition solid, Bewkes said the company was confident and would be more aggressive.

One area where it will increase investment in 2011 is in TV production in the U.S. and internationally.

“We see very strong secular dynamics for TV production in the U.S. Broadcast networks are funneling retrans payments back into programming investments. There’s growing demand for original cable series, and we’ve seen record prices for the top shows coming off broadcast in the syndication,” he said. “This year, we’ll ramp up the development of new shows for broadcast, particularly comedies, and we’ll increase production to meet the demand for original cable series.”

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