Cable Drives Time Warner's Record Q4


A strong performance at its networks division helped drive record increases at Time Warner inc. Inc. in 2010, with revenue rising at its highest rate in six years and operating profits achieving their highest mark in company history.
Revenue rose 6% at Time Warner in 2010 to $26.9 billion, its highest growth rate since 2004. Adjusted operating income rose 17% to $5.4 billion, the highest level in the media giant's history.
For the fourth quarter, revenue was up 8% to $7.8 billion and adjusted operating income rose 14% to $1.4 billion.
Driving that full-year growth was an 11% rise in revenue and an 18% uptick in adjusted operating income at its networks division, which includes cable stalwarts CNN, Home Box Office and Turner Broadcasting System. Time Warner said that in the fourth quarter, revenue at the networks rose 14% to $3.3 billion and adjusted operating income was up 20% to $904 million. Advertising revenue increased 21% in the quarter to $1.1 billion and was up 14% for the year to $3.7 billion.
On a conference call with analysts to discuss its financial results, Time Warner chairman and CEO Jeff Bewkes said the results are due to the multi-year plan the company put in place in 2008, starting with its split-off of Time Warner Cable, making it a pure-play content provider.
"In 2009 we successfully navigated the economic downturn and in that year we further improved the company's operating efficiency, strengthened our balance sheet and grew adjusted earnings per share by almost 30 %. This past year we significantly accelerated our case in three important areas, growth, investment and returns." Bewkes said on the call. He added that Time Warner has excelled in returning value to investors - earnings per share were up more 30% in 2010 and up 70% in the past two years and the company has returned $3 billion to investors in the form of dividends and share buybacks.
Bewkes expects the train to keep rolling in 2011, projecting that 2011 earnings per share would rise in the "low teens" percentages for the year. The media giant also increased its dividend by 11% and increased its share repurchase authorization to $5 billion.
"In 2011 we will continue this course - grow, invest and return. We're even more confident, so we are going to take even more aggressive steps," Bewkes said. He added that if the company achieves its low-teens EPS growth in 2011, it would have almost doubled earnings in the past three years.