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Time Warner's premium cash stream

Wednesday, February 11, 2015 - 02:01

Time Warner's HBO, and its Turner Broadcasting networks, continue to drive profits at the media giant, thanks to hit shows like ''Game of Thrones'' and ''True Detective''. Bobbi Rebell reports.

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Time Warner is making programs that people really want to watch, and are willing to pay for, like HBO's "Game of Thrones" and "True Detective." Subscription fees for the premium cable network, as well as its Turner Broadcasting networks, rose last quarter, and made up about half of the media giant's total revenue. The company posted earnings that beat forecasts last quarter. Analysts like the job management is doing to move the company forward, including offering HBO as a standalone video streaming service. Investors like it too. Shares near the price offered by Rupert Murdoch's Twenty-First Century Fox to take it over. S&P Capital IQ's Tuna Amobi: SOUNDBITE: TUNA AMOBI, EQUITY ANALYST, S&P CAPITAL IQ (ENGLISH) SAYING: "I think, very few investors would argue that the company was right in rejecting what appeared to be an undervalued offer, which came in about $85 at the time, if I remember. Now the shares are barely almost there, so I think there has been a lot of progress." Besides developing strong content, Time Warner is benefiting from job cuts, and the decision to spin off its publishing business, Time Inc. Analysts say, the moves have made it a leaner organization that can adjust quicker to industry changes. But the company's revenues fell short of analysts forecasts last quarter, and margins fell compared to a year ago. And the strong dollar is expected to hurt subscription revenues. Plus, those content costs aren't getting any cheaper. SOUNDBITE: TUNA AMOBI, EQUITY ANALYST, S&P CAPITAL IQ (ENGLISH) SAYING: "They have been spending over $14 billion, and on the call Jeff Bewkes said that that number expects to rise over $19 billion in a few years ahead. Having said that, I think we are encouraged by the return on thsoe investments. You look at TNT, TBS, you know they are still among the leaders in ratings across the ad supported cable universe adults swim, cartoon networks. All of these are firing on all cylinders. " And Amobi adds that the spending is on par with Time Warner's rivals in what has become a very cluttered content universe.

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Time Warner's premium cash stream

Wednesday, February 11, 2015 - 02:01