Wall Street presses CEO Jeff Bewkes about its post-Potter future
Time Warner reported double-digit gains in income and revenue during the second quarter, doing even better than Wall Street expected, but that wasn’t enough for analysts to give the company a pass Tuesday morning.
During a conference call following the earnings release, they pressed chairman and CEO Jeff Bewkes about the company post-Harry Potter future. He was quick to point out that 2012 will bring another Batman iteration, “The Dark Knight Rises,” with Christopher Nolan again at the helm.
Bewkes also noted that Zack Snyder’s re-imagining of the Superman franchise is another bright spot for 2012 and the D.C. franchise.
Home entertainment sales for the penultimate Harry Potter, “Deathly Hallows: Part 1,” helped power a 14 percent profit gain to $638 million net income for the period ended June 30. Revenue rose 10 percent to $7 billion.
Bewkes found much to wax enthusiastic about during a morning session with analysts, yet one comment he made about certain lackluster syndication pick-ups on TNT seemed to reverberate with the underperformance of the company’s hoped-for summer film blockbuster, "Green Lantern."
“Hit shows and big events win,” noted Bewkes, “The mediocre stuff loses.”
The company said that film revenue rose 13 percent to $2.8 billion during the period, led by video games such as “Mortal Kombat 9” and “Lego Pirates of the Caribbean: The Video Game,” as well as the home entertainment debut of "Deathly Hallows: Part 1."
The final installment in the Harry Potter franchise debuted last month, after the earnings close, and will continue to feed revenue to the film division, which is leaning heavily on the DC Comics franchise for future tentpoles.
Time Warner also posted a 9 percent gain in Turner Network during the period. Bewkes cited the long-term success of “The Closer” and “Rizzoli and Isles” (“the biggest audience of any dramas on cable”) and that TNT, buoyed by great NBA finals ratings, had its best quarter ever in prime time sports programming.
Any fears about the potential NBA strike, he added, are mitigated by contractual protections in the NBA contract.
HBO revenue was at $3.5 billion, as subscription revenue rose 7 percent, or $127 million, and ad revenue climbed 11 percent, or $112 million. Content revenue grew 18 percent, or $40 million, in the period.
With “Game of Thrones” increasing to 9 million viewers per episode, and “Boardwalk Empire” also succeeding (the two shows are the first pair of freshman shows in decades to be nominated for Best Drama by the Emmys), Bewkes added that five of HBO’s seven most-watched series ever are currently airing.
With 10 million online downloads, he said, “we’re agnostic” as to whether viewers watch shows on televisions, PC’s or mobile devices. Bewkes cited the company’s acquisition of Flixster as a move to ramp up their digital profile.
Citing the forthcoming Michael Mann/David Milch horse racing drama “Luck” and a forthcoming Aaron Sorkin show going behind the scenes of a cable news network as part of “the richest development slate in our history”, Bewkes also cited the success of HBO Go, the mobile platform that debuted in May.
Despite CNN’s recent scrambling for ratings in certain time slots, Bewkes affirmed the network is still outpacing its competition: “When news breaks more people turn to CNN than anywhere else.”
Warner Bros. Television had a healthy reception for its current slate of TV offerings, he said, with 27 active series (16 returning and 11 new) making the company the number one producer of TV programing.
On the publishing side, all 21 of the company’s domestic magazine titles will be offering tablet editions, the first such across-the-board roster amidst “aggressive steps we are taking to accelerate the digital transition.”
Although the analysts probed for a timetable for the company’s exploitation of its huge content library, which Bewkes admitted was “the biggest back room” available, Bewkes and Chief Financial Office John K. Martin were guarded on that topic. Bewkes noted that he’d seen other companies step into that area prematurely and that his concern was to “maximize the value of all the series and movies to add value over their lifetime—not detract from it.”