Time Warner (TWX)
Q1 2011 Earnings Call
May 04, 2011 10:30 am ET
John Martin - Chierf Administrative Officer, Chief Financial Officer and Executive Vice President
Jeffrey Bewkes - Chairman and Chief Executive Officer
Douglas Shapiro - Head of Investor Relations
Jessica Cohen - BofA Merrill Lynch
Anthony Wible - Janney Montgomery Scott LLC
Spencer Wang - Crédit Suisse AG
Benjamin Swinburne - Morgan Stanley
Richard Greenfield - BTIG, LLC
Michael Nathanson - Nomura Securities Co. Ltd.
David Miller - Caris & Company
Douglas Mitchelson - Deutsche Bank AG
Unknown Analyst -
John Janedis - UBS Investment Bank
Previous Statements by TWX
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Well, thanks a lot, and good morning, everyone. This morning, we issued 2 press releases: One, detailing our results for the first quarter; and the other, reaffirming our 2011 full year 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 non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release and trending schedules. These reconciliations are available on our website at timewarner.com/investors. Reconciliations of our expected future financial performance are also included in the business outlook release that's on our 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 Annual Report on Form 10-K and subsequent Quarterly Reports on 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, and with that, I'll turn the call over the Jeff.
Thanks, Doug, and thanks for listening in this morning. I'm very pleased with how we started off the year. We posted strong metrics this quarter including almost 20% revenue growth at our Networks segment. And while we knew coming in that we faced tough profit comparisons this quarter, our results came in right where we expected, putting us firmly on track to achieve our outlook for the full year.
We're also making a lot of progress toward our longer-term strategic objectives. In particular, our efforts to allow consumers to buy our content once and then access it on whatever device they want, wherever and whenever they want, a set of initiatives that we call Content Everywhere, continue to gather momentum.
John will talk about our financial results in detail in a few minutes. But first, I'd like to highlight some of the key operational and strategic milestones that we have achieved over the past few months. And I'll start with Turner, where our investment in must-see sports is really paying off.
Of course, the big story this quarter was our NCAA coverage. It was a huge success commercially and creatively and a big boost for the TBS, TNT and truTV brands. Our collaboration with CBS worked even better than we'd anticipated in every way: ratings, financial performance, quality of the coverage and integration of our sales efforts. It was the most watched tournament since 2005, and traffic for March Madness On Demand was up over 60%. We also surpassed our expectations for ad sales, which powered Turner to over 30% ad revenue growth in the quarter.
Our investment in sports is also paying off with the NBA. The 2010-2011 regular season was the most watched in Turner's 27 years of airing the NBA, and it was up more than 40% over last year. That momentum has continued into the playoffs, making TNT the #1 network on basic cable in April and, on some nights, making TNT the #1 network on all of television.
CNN's performance this quarter was a testament to the critical role it plays in America and throughout the world. In the midst of the catastrophe in Japan and unrest in the Middle East, prime time ratings were up more than 30% during the quarter while both of its cable news competitors saw declines. This shows that when news breaks, viewers seek out the breadth of coverage, the exceptional journalism and the trusted brand that only CNN offers. It also shows why CNN is always indispensable to its affiliates even if ratings sometimes fluctuate quarter-to-quarter.
You're probably curious to get our view on the upcoming upfront. I won't be too specific. But with the current premiums in the scatter market, very low levels of cancellations and supply constraints at most of the broadcast networks, all the indicators are very positive. The combination of our strong brands, high-quality programming and talented sales force makes us confident that our pricing will again be near the top end of the industry range across broadcast and Cable. At HBO, our investments in high-quality content are also paying off. Last month, we debuted Game of Thrones to tremendous critical acclaim, and the premier has already attracted 8 million viewers. When added to our roster of other tentpole shows like True Blood and Boardwalk Empire, HBO now has the strongest slate of programming in its history. Just as this week, we also launched HBO GO on mobile devices including the iPad, iPhone and Android smartphones. Our iPad app is getting rave reviews from the consumers who are using it, and it was the most downloaded free iPad app in iTunes this weekend.