NEW YORK – Time Warner Inc. (NYSE: TWX) today announced that it has commenced an underwritten public offering of $1.0 billion of debt securities split between senior notes due January 2022 and senior debentures due October 2041. The net proceeds from the issuance of the notes and debentures will be used for general corporate purposes, which may include stock repurchases.
The notes and debentures will be issued by Time Warner and guaranteed by Historic TW Inc. In addition, Home Box Office, Inc. and Turner Broadcasting System, Inc. will guarantee the obligations of Historic TW Inc. under its guarantee. The guarantee structure for the notes and debentures will be the same as the structure for the notes and debentures Time Warner issued in April 2011 and in 2010.
The offering is being made pursuant to an effective registration statement on Form S-3 filed with the Securities and Exchange Commission (“SEC”). Interested parties should read the prospectus included in such registration statement and the preliminary prospectus supplement for the offering and other documents that Time Warner has filed with the SEC for more complete information about Time Warner and the offering.
The offering is being made only by means of a prospectus and a related prospectus supplement. Citigroup Global Markets Inc., Goldman, Sachs & Co., J.P. Morgan Securities LLC and UBS Securities LLC are the active joint book-running managers.
UPDATE: Jeff Bewkes Admits ‘Green Lantern’ Not As Bright As Expected As Time Warner Beats 2Q Estimates
UPDATE, 9:30 AM: CEO Jeff Bewkes tried to stick to his optimistic story for Time Warner, but analysts forced him to play defense as well in this morning’s quarterly earnings call. In response to a question, Bewkes acknowledged that Green Lantern “did not live up to expectations” — although he wouldn’t say whether Warner Bros has ruled out a sequel. Despite the film’s disappointing performance, the CEO says that he’s “not concerned” about the studio’s effort to capitalize on DC Comics superheroes: “DC will be a major contributor,” with new films on tap featuring Batman and Superman.
Bewkes also said that TNT and TBS’ ratings suffered because “we had some bad programming choices in series we acquired over the last few years.” The problem may have been exacerbated by the fact that some of the shows were also available on digital platforms. As streaming services such as Netflix and Hulu become more popular, “hit shows win, and mediocre stuff loses.” Turner hopes to fix the problem by adding reruns of popular series including The Mentalist and Hawaii Five-0. One hit “can have a significant impact,” Bewkes says. He urged analysts to keep an eye on Time Warner’s upcoming initiatives involving Flixster, the movie site it recently bought, and the entertainment industry’s UltraViolet program that enables consumers who buy a home video to access it on almost any kind of device. Beginning with Warners’ Green Lantern the “vast majority” of its releases will work with UltraViolet, Bewkes says. He adds that a beta version of Flixster that will be “deeply integrated” with UltraViolet will be released this week. Beginning this fall, consumers also will be able to bring DVDs they already own to retailers who will be able to make them available from the broadband cloud. All in all, investors seemed unimpressed with today’s news even though the financial numbers beat analyst estimates: Time Warner shares are down about 2.2% in mid-day trading.
PREVIOUS, 4:42 AM: The entertainment giant ended 2Q with net income of $638M, up 13.5% vs the period last year, on revenues of $7B, up 10.2%. Earnings at 60 cents a share handily beat the Street’s forecast of 56 cents. Analysts also anticipated revenues of $6.8B.
UPDATE, 9:30 AM: Jeff Bewkes probably rues the day he agreed to sit down with Charlie Rose for an interview last week: The Time Warner CEO spent much of this morning’s quarterly conference call with Wall Street analysts explaining what many of his answers meant — especially his apparent about-face in saying that he now welcomes Netflix’s effort to become an online programming service. “I’ve tried at times to be humorous,” says Bewkes, who once likened Netflix to the Albanian Army trying to take over the world. For those who didn’t get the joke about welcoming Netflix, he says that he thinks it’s fine for the Web service to buy lots of old TV re-runs. “That’s good for everybody.” But that doesn’t mean he wants Netflix to serve as an inexpensive alternative to traditional cable networks including HBO. He’s against having a subscription video service that would “devalue the content.” Bewkes says he isn’t concerned yet about cable and satellite customers cancelling their pay TV service in favor of Netflix and free programming from over-the-air broadcasters. “We don’t think U.S. consumers want less choice,” he says. That’s why he’s “open to the idea” of renting more Warner Bros programming to Netflix as well as other services that are “rustling around in the forest.” As for his statement that Time Warner was likely to exceed expectations, Bewkes says that was “taken a little out of context.” He simply meant that the company …
The company reported a profit of $522 million, down from $662 million same quarter last year. The 21% drop was due in large part to a one-off debt-redemption charge. But things were looking solid for the entertainment side. Revenue for the media and entertainment group was up 2% to $6.4 billion from a year ago. Profits at the networks division jumped 23%. At its cable networks unit, subscription revenue increased 9% and ad revenue jumped 10%. But the company did say that it expected to lose more than 1 million HBO customers this year, indicating consumers are more apt to find programming via online alternatives. On the film side, profits dropped 31%, but its revenue stayed relatively even at $2.8 billion. The profit drop was due mainly to comparisons to last year, when The Hangover and Harry Potter and the Half-Blood Prince led a strong season. Inception was this quarter’s big draw. The publishing unit’s profits rose 45%.
UPDATE: The Walt Disney Co was the last major studio and network to report quarterly earnings, and its fiscal 3rd quarter profit rose 40% on the strong box office grosses from Pixar’s Toy Story 3, Marvel’s Iron Man 2, and Tim Burton’s Alice In Wonderland 3D. As promised, here is an earnings roundup showing that Big Media is alive and well and even flourishing not just this quarter but in many cases for next quarter or even the entire year. Yet the trickle down effect has been slow or nonexistent for Hollywood. After rounds of layoffs during the economic crisis, the moguls are still slow to put people back to work. And the movie and TV community still is underemployed. But what everyone can count on is that Big Media’s good news for the benefit of Wall Street will turn into bad news to the detriment of talent, behind-the-camera, post-production, and below-the-line unions when it’s time to negotiate:
August 5th: Viacom Inc Reports Sharply Higher Earnings For Q2
Credit the rebounding economy and recovering advertising market. Net earnings rose to $420 million, or 69 cents a share, up 52% from $277 million, or 46 cents a share, a year ago. Executive Chairman Sumner Redstone gushed, ”With six months under our belt in this calendar year, day after day our confidence continues to grow as the emerging economy recovery builds. Now of course we’re not all the way back, but the light is brighter than it’s been for some time… Consumers are returning to the marketplace, marketers are beginning to spend again to grow revenues and capture share and Viacom is now and will continue to benefit.” Revenue at Viacom’s media networks group rose 6% to $2.1 billion.
Viacom CEO Philippe Dauman said ad revenue growth has been improving quarter by quarter. “Once we get into October and into the December quarter, we will benefit from this upfront where we have greater volume than last year at higher pricing. Dauman singled out Jersey Shore as a show where ”we have advertisers scrambling to get on it. We have advertisers who want to be wall to wall in particular episode. We’re turning them away.” Viacom’s movie business was down 10% to 41.25 billion, led by a 43% drop in home entertainment revenue. Also, Paramount Pictures has primarily been distributing others’ films like Iron Man 2 and Shrek Forever After in 2010 and self-financing its own pics. It is deliberately pursuing a strategy of a smaller slate of films in 2010-2011. Still, the film unit booked income of $69 million, reversing an $8 million loss in the same quarter a year ago. Viacom continued to post equity losses from its EPIX joint venture but said it should approach break-even by the end of the year.
August 4th: News Corp Posts Improved 4th Quarterly Results
News Corp posted a profit of $875 million, or 33 cents a share, for its fiscal 4Q ended June 30th easily beating analysts expectations. That compared with a loss of $203 million, or 8 cents a share, a year ago, when News Corp took an impairment charge. Revenue grew 6% to $8.11 billion, as companies spent more to advertise on the company’s television stations, TV channels and newspapers. That beat the average forecast of analysts of $8.05 billion. COO Chase Carey explained that brisk sales of advertising at Fox Broadcasting and the company’s cable television networks made the difference, while ad rates at the Fox network are up by a double-digit percentage from this spring. Ad rates are even better at the cable channels, which already represent more than 50% of the company’s profits. Local television station advertising revenues improved 29% in the quarter and 8% for the year compared to the same periods a year ago, reflecting strength in the automobile and telecom sectors.
On yet another day when the stock market is tanking comes this Wall Street play: Time Warner announced that it’s agreed on a plan to separate from Time Warner Cable, the No. 2 U.S. cable TV service provider. The move, which had been expected, is being billed in news reports as a chance for the companies to have more flexibility to compete in their respective fields and give investors a better choice how to allocate their assets. But, c’mon: a fat dividend for TWX and additional debt for TWC? Which side would you like to be on? And to think, it was Gerry Levin’s cable play that got him the top spot at the company in the first place oh those many years ago. Of course, his successor Dick Parsons should have divorced cable but didn’t have the balls. So again it falls to Parsons’ successor TW boss Jeff Bewkes to do all the unpopular heavy lifting: he said today that, among other details of the transaction, Time Warner Cable will declare a dividend of $10.9 billion, of which Time Warner Inc. will receive $9.25 billion. Time Warner will distribute its stake in Time Warner Cable to TWX holders. and Time Warner Cable will have a single class of stock when the deal is done. I think TWC deserved a better divorce lawyer.