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‘Hangover,’ ‘Holmes’ Help Time Warner Return to Profit

Strong fourth quarter sign media giant may be emerging from doldrums; Bewkes won’t rule out MGM buy

Time Warner swung to a fourth quarter profit thanks to a strong theatrical opening by "Sherlock Holmes" and DVD sales of “The Hangover,” the company said on Wednesday.

For the total year, Time Warner returned to profit (of $4.54 billion) in 2009, following an operating loss of $3.03 billion in 2008.

The media giant – which owns Warner Bros. film studios and Time Inc. — announced its first quarterly results since spinning off AOL in early December. Time Warner also shed its Time Warner Cable until last year, opting to focus on content creation rather than delivery.

Time Warner raised its quarterly dividend paid to shareholders by 13 percent.

Time Warner’s results — coupled with News Corp.’s strong fiscal results announced Tuesday — are cautious signs that the media industry may be emerging from the doldrums of 2008 and 2009.

Revenue at Time Warner’s filmed-entertainment unit, including Warner Bros., increased 6.6 percent during the fourth quarter, while earnings leapt 61 percent.

Chairman Jeff Bewkes told investors said he expects Time Warner’s adjusted earnings to grow in the double-digits in terms of percentage in 2010.

Bewkes said the studio and networks, including HBO, achieved "record profits" last year. Seven movie releases, he noted, crossed the $100 million mark at the box office, including "Holmes" and "The Hangover."

Revenues at Turner and HBO rose 5 percent in 2009, driven by a 10 percent jump in subscription revenues. The company said TNT’s 2009 NBA broadcasts scored the highest ratings in 26 years of airing games.

However, revenues at the company’s troubled Time Inc. publishing unit fell 19 percent to $3.7 billion for the year, driven down by a 22 percent slide in advertising, which will undoubtedly lead to increased speculation that Time Warner will ultimately spin off Time Inc., too.

When asked if Time Warner would look to acquire MGM’s on-the-block library of films, Bewkes said he is "comfortable with our size," but wouldn’t rule out a deal.

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