Today I’ll be tracking today’s Time Warner Investor Day gathering in New York — the first one it has held since 2010. It’s important: Investors have seen the value of their shares melt by 18.5% since mid-July to $70.64 yesterday. Shareholders became excited after word got out that Rupert Murdoch’s 21st Century Fox offered to buy the company for $85 a share, or $80B, and fell after CEO Jeff Bewkes rejected the bid. He said that his strategies would generate more value.

He’ll have to overcome a lot of skepticism to prove that he is right. Overall ratings at his Turner networks are down, the ad market is soft and programming costs are growing especially for sports. Turner just announced that it’s laying off about 10% of its workforce. And the year-over-year domestic box office for Warner Bros. films is down about 15%.

David Lieberman October 15, 20146:28 am

Hi everybody. We’ll be tracking today’s Time Warner Investor Day gathering in NYC — the first one it has held since 2010. It’s important. Investors have seen the value of their shares melt by 18.5% since mid-July to $70.64 yesterday. Shareholders became excited after word got out that Rupert Murdoch’s 21st Century Fox offered to buy the company for $85 a share, or $80B, and fell after CEO Jeff Bewkes rejected the bid. He said that his strategies would generate more value. Today’s his chance to persuade everybody that he’s right. 

David Lieberman October 15, 20146:31 am

He’ll have to overcome a lot of skepticism. Overall ratings at his Turner networks are down. The ad market is soft. And programming costs are growing, especially for sports. Turner just announced that it’s laying off about 10% of its workforce. It’s not clear what HBO will do in response to growing competition from Netflix and other streaming services. And the year-over-year domestic box office for Warner Bros. films is down about 15%, in part because it has fewer releases than it did at this point last year. 

David Lieberman October 15, 20146:33 am

The meeting just began with — what else — a video featuring clips from Time Warner movies and TV shows. 

David Lieberman October 15, 20146:35 am

Bewkes: We’ve streamlined the company, put in new management. Our scale, our brands, the management, puts us in a position to capitalize on the trends in the world…growing demand for high quality video content.

David Lieberman October 15, 20146:36 am

Bewkes: Grown adjusted EPS faster than competitors. We’re just getting started. …Going to more than double earnings over the next several years. That’s a big headline.

David Lieberman October 15, 20146:37 am

Bewkes: Across the globe we see increased demand for the best content….U.S. multichannel growth remains healthy particularly for the strongest network groups like ours. 

David Lieberman October 15, 20146:38 am

Bewkes: Broadband has introduced new bidders for our content. …We intent to invest heavily. 

David Lieberman October 15, 20146:40 am

Bewkes talks up his spinoffs — about half of the company –with AOL, Time Warner Cable, and Time Inc. Now focused on “great video content….I’m extremely confident that we have enough scale to compete effectively.”

David Lieberman October 15, 20146:41 am

We’ve put in the next generation of leadership….They’re collaborative and collegial. 

David Lieberman October 15, 20146:42 am

Turner has two new series pilots from Warner Bros. There’s a new global kids partnership between Warner and Turner — more to come today about that.

David Lieberman October 15, 20146:44 am

Says there are risks from pay TV distributor consolidation. Shift of advertising to digital. But slowdown in this year’s upfront was from buyer desire to maintain flexibility, and ratings decline mostly from measurement issues.

David Lieberman October 15, 20146:44 am

Warner Bros is seeing the value of its franchises like Lego, DC, and Harry Potter.

David Lieberman October 15, 20146:46 am

Great content is the life blood of our business. Time Warner spent $14B on content and marketing last year. “We produce the biggest hits in the world.”

David Lieberman October 15, 20146:46 am

HBO Go is the “gold standard TV Everywhere product.”

David Lieberman October 15, 20146:49 am

Laser focus on operating efficiency and capital efficiency. Keeping a tight lid on overhead expenses. …Intends to continue returning value to shareholders. Slide says “Strategy is Working” — today’s key theme.

David Lieberman October 15, 20146:50 am

Disciplined approach to capital allocation: $25B returned to shareholders since 2009 in dividends and share buybacks, after investing $75B in programming and production. 

David Lieberman October 15, 20146:51 am

We couldn’t be more excited about where we are today. Now turns over to Turner CEO John Martin.

David Lieberman October 15, 20146:54 am

Martin: TNT and TBS are top five networks for last 10 years. …Pleased by momentum at TNT.

David Lieberman October 15, 20146:55 am

Martin: $2B being spent on programming. Now $500M on originals — will double by 2018.

David Lieberman October 15, 20146:56 am

Martin: Talks up Adult Swim, truTV, growth abroad.

David Lieberman October 15, 20146:57 am

Martin: Sports cements the must-have status our networks enjoy. MLB playoffs, NCAA championship, NBA. Also Bleacher reports passed Yahoo as the No. 2 digital sports destination.

David Lieberman October 15, 20146:59 am

Martin: Kids business now is $1.3B in annual revenue. Outside U.S. business is significant esp. in Brazil, India, Italy, Spain, UK, Germany. But 85% of revenue from traditional TV — small amount of revenue from consumer products. “We’ll be going after a much bigger business.” More to come.

David Lieberman October 15, 20147:00 am

Martin: CNN is No. 1 in total reach, beating Fox News. “I’m hugely bullish” about CNN. News breaking resources, “a competency that is not easily replicated.” Original series will double next year.

David Lieberman October 15, 20147:01 am

Martin: Multiplatform and digial is the future of news, and CNN has “strong leadership.”

David Lieberman October 15, 20147:02 am

Martin: Expects double digit operating growth through 2018.

David Lieberman October 15, 20147:04 am

Martin: Turner has to grow brands with distinctive programming — needs to invest. Intelligently expand internationally. Turner 2020: targets at freeing up capital.

David Lieberman October 15, 20147:06 am

Martin: We are getting the rate increases we’re seeing. By year end will have new deals with 8 of top 10 distributors. “We’re approaching these discussions from a position of strength.” 85% of revenues from top four networks. 

David Lieberman October 15, 20147:07 am

Martin: Sports is just 4% of programming but 25% of advertising. It also enables Turner networks to win 40 nights, about 10%. 

David Lieberman October 15, 20147:08 am

Martin: Cost increases from the new NBA deal were anticipated and planned for. says that there will be another sports rate renewal cycle in a few years.  

David Lieberman October 15, 20147:10 am

Martin: We’re going to own more of the original programming that airs on our networks. …By “we” he means Time Warner — including Warner Brothers.

David Lieberman October 15, 20147:11 am

Martin: Expects to grow adjusted operating income from overseas properties by high single to low double digit percentages each year.  

David Lieberman October 15, 20147:15 am

Martin: 2013 expenses: 7% personnel (Programming), 21% personnel (non-programming, 49% Programming, 23% Other….Will take charges for layoffs and programming that will be abandoned. …Says Turner can hold growth in programming costs to high single digits on compound annual basis. 

David Lieberman October 15, 20147:17 am

Martin: Addressing ratings issues. We have had some ratings headwinds, but also plans to grow them… More than half of the ratings declines are a measurement issue. Increasing VOD viewing — but those aren’t measured. Also PC, smartphone and tablet viewing. Working hard on ways to measure, and monetize VOD. Video consumption year to date is up, not down.

David Lieberman October 15, 20147:18 am

Martin: Upside in ratings assumptions. Brands that target millennials (Adult Swim, truTV, HLN). Digital. And kids. “Turner is dramatically underpunching its weight in the kids business.”

David Lieberman October 15, 20147:20 am

Martin: Over next 4 years will increase hours of original content by 80%, spending $1B a year by 2018, up from $500M in 2013. 

David Lieberman October 15, 20147:21 am

Martin: If Turner can merely hold ratings flat, it’ll have hundreds of millions of dollars in upside. Subscription VOD now less than 1% of overall revenues — but Turner’s exploring opportunities. 

David Lieberman October 15, 20147:24 am

Martin: Turner has an upcoming drama about a doctor searching for life after death, brought by Kyra Sedgwick. Also TBS has a Steve Carrell show, Angie Tribecca.

David Lieberman October 15, 20147:26 am

Martin: Adult Swim has a terrific opportunity. It’s a brand Turner can bring outside, possibly online internationally. Cartoon Network also could go online overseas…. In 2015 will introduce a show with Triumph the Insult Comic Dog. 

David Lieberman October 15, 20147:30 am

Martin: Here’s the kids biz reveal. Now about 5% of Turner’s kids’ revenues come from consumer products. “We lost opportunities to build franchises.” But reorganization will change that: Boomerang will be flanker brand for Cartoon Network with focus on licensed merchandise. WB and Turner will approach kids business as one company. Will build global franchises with global characters.