Time Warner: Mag Group May Dive 30%, TV Dips

Media Post ^ | 4-30-2009 | David Goetzl

[My Favorite Headache]

Time Warner: Mag Group May Dive 30%, TV Dips

Time Warner is anticipating that ad dollars at its Turner networks will fall in a mid-single-digit percentage range for the current April-June period, a top company executive said Wednesday. At the Time Inc. magazine group, a decline in the 30% range is possible.

Time Warner also indicated it would be spinning off all or part of the AOL unit soon.

CFO John Martin said one contributor to the expected Turner drop this quarter is a decline in international revenue. But he said that advertisers are also exercising options to cancel spending commitments at a higher rate than a year ago, although he did not elaborate. He did say that scatter business is coming in close to air date, so the level of the projected ad drop is difficult to forecast.

Unlike other networks, which have maintained that scatter pricing is still topping upfront levels, Martin said scatter CPMs at Turner are "about flat."

For the completed January-March period, the ad dollars were about the same at the Turner group's domestic networks as a year ago. The entertainment networks -- which include TNT and TBS -- saw a small drop, while the CNN news channels were up slightly.

(Credit Suisse wrote in a report that it is likely Turner increased market share in the first quarter with the flat results, while UBS said the performance is "consistent with industry trends.")

Worldwide, Turner ad dollars declined 2% to $723 million, primarily because of a significant decline internationally. Martin spoke on a conference call to discuss first-quarter results.

Time Warner does not break out revenues for the Turner group, reporting its performance in conjunction with the non-ad-supported HBO. The combination saw revenues up by 6% in the first quarter to $2.8 billion as affiliate fees climbed.

In the quarter, Time Inc. saw ad dollars down 30% (or $167 million) -- a figure perhaps more discouraging, since there was a decline at the online operations, which account for 15% of domestic ad dollars. The rate of decline was not specified. Martin said so far in the current quarter, Time Inc. is posting similar results, although "visibility" regarding projections is low.

Ad dollars accounted for about half of Time Inc.'s $806 million in revenues in the first quarter. Martin indicated that the 30% year-over-year decline was driven mostly by advertisers cutting back in spending and not forgoing magazines entirely -- "which we think will help revenue rebound once demand comes back into the market."

Still, Time Warner CEO Jeff Bewkes said earlier in the call that the company is not assuming the ad market at Time Inc. "will automatically come back when the economy returns."

At AOL, ad dollars dropped 20%, contributing to an overall 23% decrease at the AOL unit to $867 million. Within the ad pie, which is about half of AOL's revenues, display advertising fell 17%.

Time Warner executives indicated that AOL would be spun off in some form soon; the company is also moving to repurchase the 5% stake owned by Google. AOL is now led by former Google executive Tim Armstrong. Bewkes also said he is looking to "make AOL once again a must-buy for premium advertisers."

"It's fair to say that Tim wouldn't have come to AOL if he didn't see a lot of upside in the value of AOL's brand and in its products and in its inventory," Bewkes said on the call.

Bewkes said Armstrong is working with top executives to "determine the best structure for AOL." A spinoff could include all or parts of the company.

Overall for the first quarter, Time Warner's revenues dropped 7% to $6.9 billion.

[A_Former_Democrat]

Can someone hand me a Kleenix?

(be sure to wash your hand first)

[Fred Hayek]

Typically I would say “Do the market a favor - die.” A line I usually give to companies that are arrogant towards their market, and can’t figure out why their business is going dwon the toilet.

However it is no longer a free market economy. Time-Warner-AOL shills the far left line. Therefore, according to Obamanomics, this failed business model requires the support of the taxpayer.

[Eric in the Ozarks]

I go out of my way to avoid TIME.

[digger48]

At the same time their cover story photos of Obama are up 40%.

[Huskrrrr]

Got a Time subscription request in the mail. The annual subscription for Time is now $20. If they would throw in a free boom box, a free subscription to SI, and a $20 rebate I might consider subscribing. NAH!