Time Warner Inc. (TWX)

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Time Warner (TWX)

Q4 2011 Earnings Call

February 08, 2012 10:30 am ET

Executives

Douglas Shapiro - Head of Investor Relations

Jeffrey L. Bewkes - Chairman and Chief Executive Officer

John K. Martin - Chierf Administrative Officer, Chief Financial Officer and Executive Vice President

Analysts

Spencer Wang - Crédit Suisse AG, Research Division

Richard Greenfield - BTIG, LLC, Research Division

Jessica Reif Cohen - BofA Merrill Lynch, Research Division

Michael Nathanson - Nomura Securities Co. Ltd., Research Division

Alexia S. Quadrani - JP Morgan Chase & Co, Research Division

Douglas D. Mitchelson - Deutsche Bank AG, Research Division

Anthony J. DiClemente - Barclays Capital, Research Division

Jason B. Bazinet - Citigroup Inc, Research Division

Presentation

Operator

Welcome to Time Warner Inc.'s Fourth Quarter and Full Year 2011 Earnings Conference Call. My name is Christine, and I will be your operator for today's conference. [Operator Instructions] Please note today's conference is being recorded. I will now turn the call over to Doug Shapiro, Senior Vice President of Investor Relations. Sir, you may begin the call.

Douglas Shapiro

Thanks. This morning, we issued 2 press releases, one detailing our results in the fourth quarter and full year, and the other providing our 2012 business outlook.

Before we begin, there are 2 items I need to cover. First, we refer to certain non-GAAP financial measures. Schedules setting out reconciliations of these 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 our website at timewarner.com/investors. Reconciliations of our expected future financial performance are also included in the business outlook release that's available on our site.

And 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 I'll turn the call over to Jeff.

Jeffrey L. Bewkes

Good morning, and thanks for listening in. We had a great fourth quarter, capping another great year. In 2011, we grew revenue 8%. That's our highest rate since 2003. We grew adjusted operating income 9%, and we grew adjusted earnings per share 20%, exceeding our guidance. In fact, we've more than doubled our adjusted EPS over the last 3 years.

We had a strong year operationally, too. We not only maintained our leading position across almost all of our businesses, in most cases we took share. We're at the vanguard of the industry in advancing the next generation of digital business models, and we expanded our international presence.

At the same time, we significantly increased our returns to shareholders. We directed $5.6 billion to dividends and to stock repurchases, buying back 12% of our shares in just one year. And in 2012, we plan to keep the momentum going. We'll drive to deliver double-digit growth in adjusted EPS again, and we also just raised our dividend by 11% and announced a new $4-billion repurchase authorization.

We intend to achieve our financial goals while remaining as focused as ever on our key strategic priorities: first, invest aggressively to create and acquire the best content; second, accelerate new business models that harness technology to improve the consumer experience, but in a way that supports our economics; third, expand internationally in key territories; and fourth, continuously work to improve both our operating and our capital efficiency.

Let me tell you how we're pursuing these objectives at each of our divisions in 2012, starting with Networks. At Turner, we'll keep ratcheting up our investment in content as we seek the optimal mix of sports, originals and acquired programming. For instance, 2011 was the first year of our 14-year agreement to air the NCAA men's basketball tournament with CBS. It outperformed our expectations on every count in 2011: viewership, digital metrics, sponsorships and ad revenue. The 2012 tournament is just around the corner, and we are very pleased with advertiser demand as we head into the tournament.

We're also excited to have the NBA back on TNT. We've seen extremely strong ratings so far, and every indication is that the lockout did not diminish fans' enthusiasm at all. For 2012, we'll increase investment in original programming again. At TNT, we'll bring back some of the biggest shows on ad-supported cable, like the final season of the of The Closer; the next season of Rizzoli & Isles; and the #1 new drama on cable last year, Falling Skies.

Starting this summer, we'll debut several new shows, including our highly anticipated reboot of Dallas, as well as Major Crimes, Perception and The Great Escape. You'll also see more original programming on the TBS prime time lineup later this year. And in 2012, we'll build on the momentum of our original programming at truTV and on Adult Swim. Both of these networks are coming off record years for viewership.

And last but not least, we expect another strong year at CNN. In 2011, CNN was up more than 20% in its key demo, driven by the news cycle and by our programming moves over the past year. That momentum should serve CNN very well as we head into an election year.

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