Time Warner CEO says ‘strategy is working’ after strong quarter

Time Warner CEO Jeff Bewkes
Time Warner CEO Jeff Bewkes touted the company’s strong second quarter performance and stressed that it has no major weaknesses that a big deal could fix.

Time Warner Chief Executive Jeff Bewkes said the entertainment giant is not lacking anything and that bigger is not always better.

Speaking to Wall Street analysts a day after Rupert Murdoch’s 21st Century Fox withdrew its unsolicited and unwelcome $80 billion offer for Time Warner, Bewkes touted the company’s strong second quarter performance and stressed that it has no major weaknesses that a big deal could fix.

“We have leading scale in all of our businesses,” Bewkes said. While he declined to talk specifically about the 21st Century Fox offer, which the Time Warner board rejected, he did tell analysts, “look at all sides of the issue when you are contemplating putting very large companies together.”

A marriage of 21st Century Fox and Time Warner would have put two giant movie and TV studios under one roof as well as several cable channels and two broadcast networks. Just the idea of such a combination sent shock waves through much of the creative community who feared the power and leverage such a company could have over writers and producers.


Bewkes cited regulatory scrutiny and “business interruption” as key factors to consider before entertaining any potential deals.

21st Century Fox dropped its offer after it became apparent it would need to sweeten the deal. Its own investors, nervous that 21st Century Fox might overextend itself in pursuit of Time Warner, reacted negatively as well and drove its stock price down more than 10% since news of its offer broke in mid-July.

Time Warner stock has dropped 12% since 21st Century Fox withdrew its offer. It was trading at $74.95 mid-day Wednesday.

Thanks to a strong second quarter from its Turner Broadcasting and HBO units, Time Warner had profits of $850 million, or 95 cents a share, up from $771 million, or 81 cents a share, a year earlier. Revenue for the quarter was $6.8 billion, a 3% increase.


“When faced with a hostile takeover bid, Time Warner did exactly what they should have done.  They crushed numbers,” said media analyst Michael Nathanson.

Bewkes said the results are “evidence that our strategy is working”

At Turner, parent of TNT, TBS, TruTV, Cartoon Network and CNN, revenues were up 5% to $2.8 billion thanks primarily to increased subscription fees from pay-TV distributors. Despite the growth, there are ratings challenges at many of the networks and Bewkes acknowledged that some of the channels need reinvigorating.

New Turner Chief Executive John Martin is in the midst of an overhaul at Turner and the company warned that may lead to restructuring charges later in the year. The company is also expected to write-down some recent programming purchases at Turner that have not panned out.

Revenues at HBO jumped 17% to $1.4 billion in large part because of sales of its programming to Amazon Prime Instant Video.

Warner Bros. revenue fell 2% to $2.9 billion primarily because last summer the movie studio was stronger thanks to “Man of Steel,” “The Hangover Part III” and “The Great Gatsby.”

Twitter: @JBFlint

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