Time Warner Inc.
), the diversified media conglomerate, recently posted
better-than-expected first-quarter 2012 results.
The quarterly earnings of 67 cents a share beat the Zacks
Consensus Estimate of 64 cents, and surged 16% from 58 cents posted
in the prior-year quarter, reflecting higher adjusted operating
income across Networks, and Film and TV Entertainment (earlier
Filmed Entertainment) segments. Share repurchase activity also
provided some cushion to the bottom line.
On a reported basis, including one-time items, quarterly
earnings came in at 59 cents a share -- flat with the year-ago
Time Warner reiterated its low double-digit growth expectation
for fiscal 2012 earnings per share. The current Zacks Consensus
Estimate for fiscal 2012 is $3.20 per share, reflecting growth of
11% from fiscal 2011.
Time Warner's total revenue in the quarter grew 4% to $6,979
million from the prior-year quarter on the back of growth
registered in the Networks, and Film and TV Entertainment segments.
The reported revenue also handily beat the Zacks Consensus Estimate
of $6,809 million.
Adjusted operating income during the quarter climbed 6% to reach
$1,351 million, whereas operating margin expanded 30 basis points
The company has been expanding its digital presence to
facilitate consumers with content on more platforms and devices.
The company also remains committed to augment its investments in
programming, production and marketing, while concentrating on
operating and capital efficiencies.
division's revenue, which includes Turner Broadcasting and HBO,
rose 3% to $3,602 million, driven by an increase of 5% in
subscription revenue and a jump of 6% in advertising revenue,
partially offset by a decline of 18% registered in content
Adjusted operating income for the segment rose 3% to $1,201
million attributable to growth in revenue, partially offset by
higher expenses, including increased programming costs.
Film and TV Entertainment
segment revenue climbed 7% to $2,784 million attributable to robust
theatrical line-up, increased television licensing revenue and the
subscription to video-on-demand accessibility of a television
series, partially offset by a fall in home entertainment
Adjusted operating income for the division, which comprises
Warner Brothers, surged 39% to $215 million on the back of
increased revenue, partially offset by higher film costs.
revenue fell 3% to $773 million reflecting a 5% decline in
advertising revenue due to a fall in domestic magazine advertising
revenue, and a 2% drop in subscription revenue on account of
reduced domestic and international newsstand revenues, partly
offset by increased domestic subscription sales.
Adjusted operating income plunged 38% to $39 million from the
prior-year quarter, principally due to lower domestic magazine
Other Financial Aspects
Time Warner ended the quarter with cash and cash equivalents of
$2,877 million, long-term debt of $18,425 million, reflecting a
debt-to-capitalization ratio of approximately 38%, and
shareholders' equity of $29,781 million.
During the quarter, Time Warner incurred capital expenditures of
$133 million and generated free cash flow of $318 million.
From January 1, 2012 through April 27, 2012, Time Warner bought
back 24 million shares, aggregating $889 million. The company's
board of directors had authorized a share buyback plan of $4
billion in January 2012.
Currently, we have a long-term Neutral recommendation on the
stock. Moreover, Time Warner, which competes with
Walt Disney Company
), holds a Zacks #3 Rank that translates into a short-term Hold
rating, and correlates with our long-term view.
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