Time Warner Inc. (TWX)
Q2 2009 Earnings Call
July 29, 2009 10:300 am ET
Doug Shapiro – Senior Vice President, Investor Relations
Jeffrey L. Bewkes - Chief Executive Officer
John K. Martin - Chief Financial Officer
Spencer Wang - Credit Suisse
Douglas Mitchelson - Deutsche Bank Securities
Jessica Reif-Cohen - BAS-ML
Michael Nathanson – Sanford Bernstein
Richard Greenfield - Pali Research
Benjamin Swinburne - Morgan Stanley
Michael Morris - UBS
Anthony Diclemente - Barclays Capital
Alan Gould - Natixis Bleichroeder
Jason Bazinet - Citigroup
Previous Statements by TWX
» Time Warner Inc. Q3 2009 Earnings Call Transcript
» Time Warner Q1 2009 Earnings Call Transcript
» Time Warner Q4 2008 Earnings Call Transcript
This morning, we issued two press releases, one detailing our results for the quarter and the other reaffirming our 2009 business outlook. Before we begin, there are two items I need to cover.
First, we refer to certain non-GAAP financial measures. Schedules setting out reconciliations of these historical non-GAAP financial measures to the most directly comparable GAAP financial measures are included in our earnings release, and trending schedules. These reconciliations are available on the investor portion of our Web site at timewarner.com/investors. A reconciliation of our expected future financial performance is also included in the business outlook release that's available on our Web site.
Second, today's announcement includes certain forward-looking statements which are based on management's current expectations. Actual results may vary materially from those expressed or implied by these statements due to various factors. These factors are discussed in detail in Time Warner's SEC filings, including its most recent Form 10-K and Form 10-Q. Time Warner is under no obligation, and in fact, expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.
Thank you for your attention and now let me turn the call over to Jeff.
Jeffrey L. Bewkes
With half a year behind us, I am very pleased with what we've accomplished so far, particularly in light of the obviously difficult economic environment.
The advertising markets where we operate have been more stable lately, but we aren't seeing major improvements and because advertisers are holding onto budgets longer, our visibility remains lower than usual.
Home video sell-through also remains pressured by tough retail trends. Against this backdrop, adjusted OIBDA for our content businesses rose 4% in the second quarter and it's up 3% for the first half. In fact, we expect it to grow for the full year, which should prove to be a considerably stronger performance than most of our media competitors.
As you saw this morning, we are confident that we will achieve our full year outlook. Our performance so far this year reflects both the diversity of our revenue streams and the continuing progress we're making towards our key operating goals.
And as we've discussed before, these goals are: first, to leverage our scale and brands to deliver high quality content consistently; second, to keep improving the efficiency of our operations; third, to expand internationally; and fourth, to continue to develop business models that capitalize on changes in the consumer usage and technology.
Let me give you a few examples of what we achieved this quarter, starting with the success of our content. You all know I've talked before about why hits are growing in value, even as consumption continues to fragment. I've also discussed why our brands and scale enable us to attract talent and consistently make better contact than our competitors, average quarter in and out. In both good and bad times.
Despite conventional wisdom, we're demonstrating that it is possible to institutionalize success in what is thought to be a hit-driven business. Now, no one can make only hits, but even a slightly better, consistent batting average can clearly yield big advantages over time.
Take our film and TV production businesses. Two weeks ago Harry Potter and the Half-Blood Prince set a new worldwide opening record. It generated almost $400.0 million in its first five days. And with this release, Harry Potter has become the most successful franchise in film history, and there are two more installments to go.
Or consider The Hangover, which just became the highest grossing R-rated comedy ever, replacing another great comedy that was in first place, The Wedding Crashers. So, it's sure to be one of the most profitable films of the year, and with those two films, we have number one and two in the category, proving that we are the funniest of the major media companies.
Warner Brothers TV is also having a phenomenal year. During the just completed up-front pick up season, we put 26 shows on the network scales, 12 new and 14 returning shows. That, once again, makes Warner's Television the number one provider of network TV programming and that's a spot we've held for 18 of the past 23 years. And we don't own a broadcast network.
With the success of both our film and TV businesses, Warner is now on pace to grow adjusted OIBDA this year, despite the soft home video environment.
Now go to the networks. Let's look at Turner, another example of how this virtuous cycle of scale, brands, and talent works. As part of our continuing push to close the gap between our CPMs and those of our broadcast competitors, last year we set the goal of airing original broadcast programming Monday through Wednesday on TNT by 20%. We're achieving that goal a year early with TNT's coming season, with new shows from Jerry Brockheimer, Mark Burnette, Ray Romano, and Jana Pinkett Smith. The level of talent on TNT today would have been unthinkable just a few years ago.