The money is flowing again into Big Media. Just about every media CEO who recently spoke to Wall Street analysts about this year’s 1st Quarter earnings said that ad sales are up and consumers are spending. “Viacom has never been stronger financially,” CEO Philippe Dauman crowed. At Disney, where net profits fell slightly, CEO Bob Iger expressed he was “confident in the trends we’re seeing across our segments”. So will these companies do more hiring and give out raises? Don’t be naive. Dauman, for one, told investors that he’s “watching for head count creep” while the company returns $1.9 billion to shareholders over the first 9 months of its fiscal year. Most Big Media companies are buying back their stock, making publicly held shares more valuable. CBS doubled its quarterly dividend to shareholders and Viacom plans to follow suit.
Here are some of the other major themes from this earnings season:
TV Advertising: Network executives were predictably upbeat about what will happen in their upfront ad sales negotiations in coming weeks. Disney CEO Bob Iger predicted the market will be “strong”. NBCUniversal chief Steve Burke upped that to “very strong”. And News Corp COO Chase Carey claimed it’ll be “truly strong”. Their pronouncements made CBS chief Les Moonves sound refreshingly bold when he projected “solid double-digit increases” in ad sales for his broadcast network. Executives cited the price increases they’ve seen in scatter sales as the economy has improved and auto, technology, telecom, … Read More »
In its first earnings call since acquiring The Huffington Post in March for $315 million, AOL reported this morning that its first-quarter profit fell 86% to $4.7 million, down from $34.7 million a year ago. The integration — which includes $27.8 million in restructuring expenses related to the HuffPo deal and the reassessment of operations in India – also impacted revenue, which was down 17% to $551.4 million. Still, shares were up in early trading today after the company said its U.S. display advertising business is showing signs of life, up 11%. “Today represents an important milestone in the turnaround of AOL as global display-ad revenue grew for the first time since Q4 2007,” chairman and CEO Tim Armstrong said. “I am proud of the work completed thus far, and we remain focused on accelerating our momentum through continued execution of our strategy to become the premier digital content company.”
UPDATE, 3:07 PM: CBS Corp chief Les Moonves is such a relentless salesman you can’t resist being suspicious when he makes seemingly over-the-top financial forecasts the way he did today. But the results in CBS’ latest earnings report are too impressive, and his predictions are too specific, to ignore. Moonves says he expects “solid double-digit increases” in CBS’ ad sales in the coming upfront market. That’s one of the most bullish forecasts we’ve heard so far from a network executive. If the NFL season falls apart due to the team owners’ lockout, then “we expect to get a greater piece of the (advertising) pie.” Talking up CBS’ programming, Moonves says that Hawaii Five-0 is destined to become “a billion dollar franchise for us” following an initial syndication deal that prices the show at $5 million an episode. Moonves also is a fan of Netflix and other companies that want to offer TV programs online: Moonves says a deal that would enable Netflix to stream CBS shows in Latin America and Canada “might happen very quickly.” He’s also talking to Amazon, and expects to hear from Blockbuster as its new owner Dish Network considers using the home video chain to launch an online subscription service. Revenue from the Netflix deal that Moonves cut in February will appear on CBS’ books beginning in the second quarter.
In other matters, Moonves says that “there are a lot of moving pieces” with the Warner Bros-produced sitcom Two And A Half Men now that Charlie Sheen is gone, and he doesn’t know whether it will return. The CEO also says that he “has no great intent to sell” CBS’ outdoor advertising business.
The bullish predictions, the strong 1Q results, a decision to double CBS’ dividend to 10 cents a share, and the company’s plan to keep buying back its stock had a predictable result: The price of CBS’ shares rose 4.4% in after-hours trading.
PREVIOUS, 1:40 PM: CBS Corporation just provided yet more evidence that the advertising market is regaining its strength. The broadcast company’s 1Q earnings smashed through analysts’ expectations. Read More »
Comcast reported today that its first-quarter revenue grew 31.8% to $12.1 billion, in addition to bumps in operating cash flow and operating income, primarily reflecting strong cable communications and cable networks results and the consolidation of NBCUniversal in January. Excluding the NBCUniversal transaction and related costs, operating cash flow grew 16.6% in the first quarter with NBCU on the books at the cable giant. ”The performance of NBCUniversal was led by our cable networks, which posted strong growth across the board,” Comcast chairman and CEO Brian Roberts said. “While we’ve only been operating the NBCUniversal businesses for three months, we’re encouraged by a seamless integration, and we are working diligently to invest and build value for our shareholders.” Cable revenue, helped by networks like USA, E! and Bravo, increased 5.8% to $9.1 billion, compared to $8.6 billion in first-quarter of 2010. Overall, NBCUniversal’s pro forma revenue of $4.3 billion decreased 11.5% compared to $4.9 billion in the first quarter of 2010, owing to $782 million in revenue generated by the 2010 Vancouver Olympics. Excluding the Olympics, pro forma revenue increased 5.2%.
Regal Entertainment Group, the nation’s largest exhibition chain, reported first-quarter results that were down across the board compared with last year. Revenue for the quarter ended March 31 was $570.9 million, compared with $719.8 million in 2010. Much like fellow exhibitor IMAX’s sluggish first-quarter results reported earlier in the day, Regal CEO Amy Miles cited “a challenging first-quarter box office environment” as reason for the decline, and also like IMAX is looking to summer tentpoles to regain momentum. The Regal board did announce a cash dividend of $0.21 per Class A and Class B share as part of what the company plans to be a regulary quarterly offering.
In March, Regal partnered with fellow big chain AMC to create Open Road, a venture headed by Tom Ortenberg that will acquire and distribute films that can play in wide release on about 2000 screens.
The box office’s poor performance during the first part of the year has impacted IMAX, too. The giant-screen exhibitor reported first-quarter results this morning that saw revenue and earnings down. “The first quarter lacked event films, particularly compared to the phenomenal strength of last year’s Avatar, and our financial results as compared to last year reflect this,” IMAX CEO Richard Gelfond said. Imax reported a net loss for the first quarter of $1 million, or $0.02 per diluted share, down from $26.6 million last year. Revenue slid from $72.8 million a year ago to $45.2 million.
Imax did boost its outlook for theater installations after saying it signed agreements for 101 theater systems during the first quarter. It also announced that it will expand its credit facility to as much as $110 million, extending the maturity to October 2015.
Time Warner Cable revenue grew 5% to $4.8 billion during the first quarter, the nation’s second-largest cable company said today in reporting earnings, citing gains in subscribers to its high-speed broadband and phone services. Net income grew from $214 million a year ago to $325 million, or 93 cents per share, a figure that beat analyst expectations. Advertising revenue increased 13.9% to $197 million, driven by year-over-year increases in categories like automotive and media. “This is an exciting time for Time Warner Cable,” chairman, president and CEO Glenn Britt said in a statement. “Our high-speed data product just crossed the 10 million subscriber threshold and is quickly becoming the anchor product in the eyes of consumers. At the same time, new technology is making it possible for us to provide an even better video experience to our customers.”
UPDATE 7:45 AM: Discovery CEO David Zaslav acknowledged this morning that ratings for OWN, the joint venture cable channel with Oprah Winfrey, were “below our expectations” — and that his company will have to spend more than the $215 million it has already invested. “It has been a slower start,” he told analysts in a conference call.” He added that “it’s going to take us a while, and we’re committed to it.” The company didn’t specify how much it would invest saying it will depend on OWN’s ratings. Meanwhile, Zaslav says that he plans to make big changes at Planet Green — the channel about environmentally friendly living. The concept “hasn’t worked out well. It’s underperforming.” Still, he’s upbeat about the upfront ad market as well as prospects to sell programs to services including Netflix and on platforms such as the iPad. “We’re unusual because we own all of our content,” he says. “We view all of those as opportunities.”
PREVIOUS, 5:36 AM: Add Discovery Communications to the list of television companies benefiting from the thawing ad market. The cable network power reports net profits of $305 million in the first quarter, up 76% vs the same period last year, on revenues of $951 million, up 9%. The revenue increase comes to 12% if you just look at properties on Discovery’s books both years. The earnings represent 74 cents per share. Analysts that follow the company expected … Read More »
UPDATE, 6:55 AM: CEO Philippe Dauman says that Paramount is starting to make business plans for 2013 and 2014 and “can accommodate having Dreamworks [Animation] titles in or out” after their distribution deal expires next year. He told analysts, in a conference call, that the companies have “a strong relationship” and that he’s ready to discuss a new deal whenever Dreamworks Animation CEO Jeffrey Katzenberg is ready. But he added that Paramount’s “development pipeline is strong” and will include more animated films following the success of its first effort, Rango.
Dauman also says that the company plans “a very significant increase” over the next year or 2 in the amount of original shows it will run on cable channel Spike. He added that he expects “significant year-over-year gains” in upfront ad sales across Viacom’s networks.
PREVIOUS, 5:11 AM: Helped by a strengthening ad market, TV hits including MTV’s Jersey Shore, and a Paramount Pictures slate that included Rango, Viacom far exceeded Wall Street analysts’ forecasts for its financial performance in the quarter that ended in March. The entertainment giant reported net earnings of $376 million, up 47% vs. the same period last year, on revenues of $3.3 billion, up 20%. That translated into 72 cents in earnings per share. The consensus forecast among analysts put earnings of 61 cents with revenues of $3 billion.
“This was an outstanding quarter, reflecting our continued operating momentum,” Viacom CEO Philippe Dauman said in a prepared statement. Read More »
UPDATE, 2:30 PM: Don’t look for DreamWorks Animation to produce additional movie genre parodies similar to its send up of mob films in Shark Tale, monster movies in Monsters vs. Aliens, and superhero films in Megamind. “All shared an approach and tone and idea of parody, and did not travel well internationally,” CEO Jeffrey Katzenberg told analysts in a conference call after earnings were announced. “We don’t have anything like that coming on our schedule now.” Also in the call, Katzenberg forcefully endorsed Netflix’s growing effort to buy the rights to stream movies and TV shows on the Web. “It has put another buyer in the marketplace, and an aggressive one,” Katzenberg says. “I know for sure it’s good news.” But he refused to take sides on the debate over Premium VOD, saying it’s “not relevant to us today.” He also wouldn’t discuss his company’s plans to negotiate a distribution deal to replace the one with Paramount that expires next year.
PREVIOUSLY, 1:42 PM: Everyone knew that the first part of this year would look disappointing for DreamWorks Animation’s earnings. It didn’t have anything to generate the toy and licensing sales it saw last year with How To Train Your Dragon. Still, DWA’s earnings fell short of analyst estimates for the first quarter. The company reported net earnings of $8.8 million, down 59.4% from the same period last year, … Read More »