UPDATE, 9:30 AM: CEO Jeff Bewkes tried to stick to his optimistic story for Time Warner, but analysts forced him to play defense as well in this morning’s quarterly earnings call. In response to a question, Bewkes acknowledged that Green Lantern “did not live up to expectations” — although he wouldn’t say whether Warner Bros has ruled out a sequel. Despite the film’s disappointing performance, the CEO says that he’s “not concerned” about the studio’s effort to capitalize on DC Comics superheroes: “DC will be a major contributor,” with new films on tap featuring Batman and Superman.
Bewkes also said that TNT and TBS’ ratings suffered because “we had some bad programming choices in series we acquired over the last few years.” The problem may have been exacerbated by the fact that some of the shows were also available on digital platforms. As streaming services such as Netflix and Hulu become more popular, “hit shows win, and mediocre stuff loses.” Turner hopes to fix the problem by adding reruns of popular series including The Mentalist and Hawaii Five-0. One hit “can have a significant impact,” Bewkes says. He urged analysts to keep an eye on Time Warner’s upcoming initiatives involving Flixster, the movie site it recently bought, and the entertainment industry’s UltraViolet program that enables consumers who buy a home video to access it on almost any kind of device. Beginning with Warners’ Green Lantern the “vast majority” of its releases will work with UltraViolet, Bewkes says. He adds that a beta version of Flixster that will be “deeply integrated” with UltraViolet will be released this week. Beginning this fall, consumers also will be able to bring DVDs they already own to retailers who will be able to make them available from the broadband cloud. All in all, investors seemed unimpressed with today’s news even though the financial numbers beat analyst estimates: Time Warner shares are down about 2.2% in mid-day trading.
PREVIOUS, 4:42 AM: The entertainment giant ended 2Q with net income of $638M, up 13.5% vs the period last year, on revenues of $7B, up 10.2%. Earnings at 60 cents a share handily beat the Street’s forecast of 56 cents. Analysts also anticipated revenues of $6.8B. The cable networks generated $3.5B in revenues, up 9% due to improvements in ad sales and deals for HBO originals including True Blood and Game of Thrones. In filmed entertainment, sales of video games including Mortal Kombat 9 and home video income from Harry Potter and the Deathly Hallows: Part 1 helped to raise revenues 13% to $2.8B. Publishing was the laggard, up 3% to $946M. CEO Jeff Bewkes noted that the company has bought back $2.3B of its shares so far in 2011, which reflects “our confidence in our competitive position and growth prospects.” For what it’s worth, the company slightly updated its profit outlook for 2011: In May, it said that the percentage growth in its adjusted earnings per share would be in the low teens this year. Now it says the increase will be “at least” low teens.