Time Warner CFO Talks M&A

John Martin identifies potential areas for expansion

Time Warner Chief Financial Officer John Martin outlined the company's mergers and acquisitions strategy today at the annual Bank of America-Merrill Lynch media and communications get together.

Martin said: "We are trying to focus our resources in capital, we've identified areas where we will be willing to invest...like local TV and home production, games and networks where we could opportunistically and thoughtfully expand, and opportunities to identify emerging territories where we could build."

Time Warner has been suggested as possible buyer of assets including NBC Universal's cable portfolio if it ever came on the market. Scripps Networks Interactive might be another potential buy.

"Cable is arguably the most attractive place to be," he said speaking on the company's many business segments, given the long distribution contracts that include increased fees year-on-year. "The [contracts] are staggered so there's no over reliance on a particular distributor and we have must have networks," he added.

In an interview, Martin was asked about the upfront performance of the company's cable channels. Turner Broadcasting's entertainment channels took CPM rollbacks in the low single digits, he said. "If you took the average of where broadcast ended up, we ended up in the middle of that average," he said. He added that third quarter scatter pricing was ‘pacing up,' relative to the upfront market. "There was a reluctance to commit in the upfront, but as long as the money stays in TV budgets, scatter could be really tight and we are a substitute for broadcast, so we're in a good position." Commenting on the children's ad market, Martin said there had been some food and beverage pull-outs but added that Cartoon Network was working on widening the potential ad universe that it could call on by increasing the age of the kids audience for the service.

At HBO Martin outlined just how profitable popular shows such as True Blood could become. "True Blood is a runaway success story. It is rating 12 million viewers a week and is the number two in terms of leadership behind The Sopranos and its having a benefit on other shows. Hung is our best freshman show in five years." He said the show had sold more than a million DVD units and ultimate revenue would be "hundreds and hundreds of millions."