* Media company's EPS beats Street view
* Sees 2013 profit rising in low double-digits
* CEO discusses HBO, movie studio changes
* Shares rise 4.5 percent
By Liana B. Baker
Feb 6 Media company Time Warner Inc on
Wednesday reported fourth-quarter net income that beat
estimates, raised its dividend and started a new stock
repurchase program, sending its shares up 4.5 percent.
Time Warner has undergone major changes in recent months.
Its Time Inc magazine unit said last week it would lay off 500
people, or 6 percent of total staff at magazines such as Time,
People and Sports Illustrated.
Time Warner last week also appointed a new chief for its
Warner Brothers TV and movie studio. In November, it tapped
former NBC Universal CEO Jeff Zucker to run CNN. Reuters
recently reported that Time Warner is evaluating whether to sell
its New York headquarters.
Time Warner CEO Jeff Bewkes spent most of Wednesday's
earnings call with analysts fielding questions about the premium
pay TV service HBO and the company's movie business.
Bewkes said HBO added 1.9 million U.S. subscribers last
year, bringing total global customers to 114 million. He
downplayed a recent deal by rival Netflix to acquire Disney's
first-run movies and push into original production, saying HBO
offered the biggest slate of Hollywood blockbusters last year,
about half of the top 25 films.
Netflix has sought to disrupt pay-TV services like
HBO by signing long-term deals to carry new movies and creating
original series like the recent Kevin Spacey political drama
"House of Cards."
Bewkes said he chose Kevin Tsujihara to replace Barry Meyer
as CEO of Warner Bros. Entertainment because "he's got the
greatest breadth of experience across Warner's businesses."
"He will bring together television, theatrical, digital and
home video, and consumer products," added Bewkes.
Bewkes ducked questions about whether Warner Bros TV chief
Bruce Rosenblum or movie studio head Jeff Robinov would leave
their posts after being passed over for the top job, but hinted
that the division would be fine without them.
"All of those execs, including Jeff and Bruce, have very
strong benches of people beneath them as well. ... We've got
really a strong next-generation coming at Warner, and all of
them are young enough to go pretty long," he said.
While the overhaul at ratings-starved CNN has dominated
headlines since Zucker's arrival, analysts appeared unconcerned,
asking no questions on the call about the cable news network.
Bewkes himself made just one boilerplate remark about the
CNN makeover: "I am optimistic that with the new leadership
we've announced, CNN will once again fulfill the promise of its
CNN began to make long awaited changes last Tuesday,
announcing the departure of its managing editor Mark Whitaker
along with three political contributors. It also hired Jake
Tapper, a former chief White House correspondent for ABC, for a
new weekday program.
Time Warner, which also owns cable networks TBS and TNT,
said it is raising its quarterly dividend by 11 percent to
$0.2875 per share. The company's board also authorized a new $4
billion share repurchase program that started in January.
"The big surprise here is the incremental return of capital
to shareholders with the new dividend and buyback," said Janney
Capital Markets analyst Tony Wible, adding that the shares were
up on that news.
The company expects 2013 adjusted earnings to rise in the
low double-digits in percentage terms from $3.28 per share in
2012. This matches the 11 percent increase that analysts, on
average, were expecting.
The results came a day after Walt Disney Co reported
earnings that beat estimates and said it expects the next few
quarters to be better because of a stronger lineup of films and
increased theme parks attendance. News Corp
was due to report quarterly results after the market
Time Warner also plans to take a $60 million restructuring
charge at its Time Inc magazines unit in fiscal year 2013
stemming from last week's layoffs, the first major move by Chief
Executive Laura Lang, who joined Time Inc in January 2012.
Operating income at the cable networks rose to $1.38 billion
from $1.14 billion a year ago. The company reported a 7 percent
increase in subscription revenue, driven partly by more HBO
subscribers. Cable unit advertising revenues rose 3 percent.
Revenue at the movie unit fell 4 percent to $3.7 billion. It
said releases of "Argo" and "The Hobbit" helped offset declines
in its home entertainment and video game business.
Net income rose to $1.16 billion, or $1.21 a share, from $773
million, or 76 cents a share, a year ago.
Adjusted for impairment costs, the EPS was $1.17, which beat
Wall Street estimates by 7 cents, according to Thomson Reuters
Revenue fell 0.4 percent from a year earlier to $8.16
billion. Analysts were expecting $8.22 billion, according to
Thomson Reuters I/B/E/S.
Shares rose 4.5 percent to $52.25.