Time Warner TV Units Sag

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Time Warner Inc.’s network and cable-system divisions went slack during the fourth quarter, with The WB Television Network’s slide being the biggest drag.

For the three months ended December, Time Warner’s broadcast and cable networks division revenues increased just 4% to $2.2 billion and operating cash flow dropped 9% to $608 million. The big problem was The WB, whose viewership plunged 18%-20% this season. That has sliced ad revenues by 10%, offsetting an 8% increase in ad revenues at the Turner networks.

License fees from operators increased for the Turner nets and pay service HBO. But so did programming costs, particularly from movies on the networks.

At Time Warner Cable, revenue and earnings growth failed to get into the double-digit percentage range that the division’s investors have grown accustomed to. Revenues grew 9% to $2 billion, while cash flow increased just 7% to $812 million.

That’s partly because of accounting games Time Warner played in past quarter, counting launch support from cable networks as advertising revenue. That money has dried up, so it’s depressing Time Warner Cable’s results.

Time Warner is expecting strong growth to return to both divisions this year. Companywide, revenue increased 6% to $10 billion, while cash flow dropped 7% to $2.4 billion.

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