Time Warner hikes dividend as outlook brightens

By David Goldman, staff writer


NEW YORK (CNNMoney.com) -- In its first financial report without Aol in a decade, Time Warner Inc. raised its dividend as it reported quarterly sales and profit Wednesday that rose from a year earlier and beat Wall Street's forecasts.

The media conglomerate's strong quarter was led by robust revenue and earnings from the television and film divisions -- the company's two strongest units. Cost-cutting, including roughly 500 job cuts, at Time Warner's publishing division, Time Inc., bolstered profit in that unit even as sales decreased.

"We began 2009 with an ambitious agenda and we achieved what we set out to do," said CEO Jeff Bewkes on a conference call with investors. "Time Warner is in a better position than ever ... and industry trends are going our way."

For the full year, Time Warner said it expects earnings per share to grow in the "mid-teens" after posting adjusted earnings per share of $1.83 for 2009. The company's 2010 forecast roughly matches what analysts expect: a 16% rise to $2.12 per share in 2010, according to a survey by Thomson Reuters.

Shares of Time Warner (TWX, Fortune 500) fell 1% in midday trading.

The recession had cut sharply into Time Warner's media subscriptions and advertising sales, but the company signaled that the worst was likely over by forecasting improved profits, reporting better-than-expected financial results for the quarter and by raising its dividend.

Time Warner raised its dividend by 13.3%, or 2.5 cents, to 21.25 cents per share per quarter. For the year, Time Warner will issue dividends worth 85 cents per share, up from 75 cents.

The outlook for the media company has improved after completing two spinoffs of non-core units during the year and restructuring Time Inc. In early December, Time Warner let go of the revenue-draining Aol (AOL) unit, and in March spun off its cable service provider Time Warner Cable (TWC).

The 2001 AOL-Time Warner merger is widely considered to be the worst in history, but it was ultimately Bewkes' focus on a "new content-focused Time Warner" that brought the short-lived marriage to an end.

By the numbers

The New York-based parent company of CNNMoney.com and Fortune said its net income rose to $627 million, or 53 cents per share, in the quarter ended Dec. 31, compared with a $16 billion loss in the year-earlier quarter.

Excluding a charge of 2 cents per share, Time Warner said it earned 55 cents per share. Analysts polled by Thomson Reuters, who typically exclude one-time items from their estimates, forecasted earnings of 52 cents per share.

The company said adjusted operating income before depreciation and amortization (OIBDA), a commonly used profit metric for media companies, rose 35% to $1.5 billion, matching analysts' expectations.

Time Warner's sales rose 2% to $7.3 billion, topping analysts' forecasts of $7.2 billion.

Sales were mostly boosted by the company's filmed entertainment segment, which includes film studio Warner Bros. Revenue rose 7% in the division, led by strong box office sales of "Sherlock Holmes" and best picture Oscar nominee "The Blind Side." DVD sales of "Harry Potter and the Half-Blood Prince" and "The Hangover" also bolstered overall revenue.

Time Warner's television networks, which include CNN and other Turner programming, also performed well in the quarter. Sales grew 4% on an 11% rise in cable subscriptions, which more than offset a 4% drop in advertising sales.

The biggest decline in sales came from the Time Inc. unit, in which revenue fell 13%. Ad sales fell 12% at the company's publishing arm, and subscriptions were down 6% in the quarter.

But last quarter's restructuring of Time Inc. helped grow profits and adjusted OIBDA in the quarter. It was the first time the publishing unit's earnings and adjusted OIBDA rose on a year-over-year basis since the first quarter of 2008. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,239.22 82.37 0.48%
Nasdaq 4,585.69 23.50 0.52%
S&P 500 2,009.70 8.13 0.41%
Treasuries 2.63 0.03 1.27%
Data as of 10:37am ET
Company Price Change % Change
Bank of America Corp... 17.02 0.25 1.49%
Yahoo! Inc 42.78 0.19 0.45%
Apple Inc 102.09 0.51 0.50%
General Electric Co 26.27 0.22 0.83%
Microsoft Corp 46.56 0.04 0.08%
Data as of 10:23am ET

Sections

Alibaba founder Jack Ma could earn as much as $867 million from his company's market debut. More

The Federal Reserve is probably not going to raise interest rates until the summer of 2015 at the earliest. More

NASA has turned over the shuttle program to two companies, Boeing and Elon Musk's SpaceX. The agency wants to pursue something far sexier. More

Immigrant entrepreneurs leverage connections abroad to boost international exports -- and non-immigrants could stand to learn from their tactics. More

Occupy Wall Street offshoot Strike Debt says it has abolished nearly $4 million in private student loan debt for students who attended Everest College, part of Corinthian Colleges. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.