Time Warner CEO Jeff Bewkes Wednesday gave investors his take on the subscription video on demand (SVOD) business, specifically Netflix, which has been inking deals left and right.
"It's not really a change in the syndication business," he cautioned. "We've been saying for a while that subscription VOD is the right place for serialized and library product—on the normal syndication market, serialized product didn't have that much value." But its value to the company was fully $350 million last year, and that's vital cash for the company, which is fighting soft ad sales and weak box office returns with strength in its television groups. "We're seeing positive impact on ratings of a new season of shows by having old seasons available on SVOD," Bewkes said. "We just put them one season back."
The company's cable division saw a 4.7 percent revenue increase overall, but that wasn't enough to offset dips in publishing, film and TV entertainment. Interestingly, despite wave after wave of negative publicity for CNN (now undergoing major leaderhip changes with Jeff Zucker at the helm), Time Warner revealed that a major driver of Q4 ad sales was the presidential election, and it's not like people watched that on TBS. To assuage uneasy investors, TWX authorized a $4 billion stock buyback program and bumped up its quarterly dividend to $0.2875 per share.
Overall, earnings beat out expectations: Wall Street analysts had pegged the company at $1.10 a share; reported earnings were $1.17.
Turner's ad revenue was up 3 percent for 2012, or $119 million, largely on the strength of an increased number of National Basketball Association games this year. For the quarter, revenue was also up 3 percent, or $38 million. The growth was offset somewhat by the shutdown of TNT's operations in India and Turkey, which did some damage to the balance sheet, as did poor performance in the TV entertainment division.
UPDATE: Despite previous reporst that there wouldn't be a new game in Rocksteady's Batman series until next year, CFO John Martin confirms that "we also have a strong games release this year, which will include the next release in the Batman Arkham franchise."