Time Warner 2012 EarningsUPDATE, 8:50 AM: Time Warner CEO Jeff Bewkes joined the pack of media company CEOs predicting that this year’s upfront ad market will be strong. “It’s looking pretty good,” he told analysts this morning. Ad cancellations are low. He also says that the company has strong momentum. Although he acknowledged that “TNT ratings remained challenged” in Q1, he believes that advertisers will warm to the addition in June of re-runs of The Mentalist, and plans to add four original series. Also CNN should benefit from the election, and Cartoon Network is “taking significant viewing share from its competition” — including Nickelodeon, which Bewkes says was hurt by its decision to offer some of its shows on Netflix. “Cartoon Network was up 14% and we think part of the reason is that we don’t have our shows spinning on (a subscription VOD) service.” Although there’s a role for streaming services like Netflix, if you put a show on “that runs the sprockets off, you’re going to erode the value.” That’s fine for older content, but for a popular show such as The Big Bang Theory “it’s unlikely it’s going to go to an S-VOD service anytime soon.” He wouldn’t mind, though, if Hulu — as widely rumored — changes its business model to be just available to pay TV customers. “We think authenticating makes sense… Hulu’s heading in the right direction now.”

Bewkes also is happy with the launch of UltraViolet, Hollywood studios’ effort to promote disc sales by also enabling buyers to stream movies to mobile devices. “It’s still early but consumers are downloading and streaming in very large numbers,” he says. It took about five months to sign up the first 1M UltraViolet users, but just a month to get the next 1M. Walmart and Amazon now support the initiative, and Bewkes says “other retailers will follow.” Why buy a movie when it’s so easy and inexpensive to rent? “There is a tendency for people to collect and want to own,” Bewkes says. “Right now rental is easier to use than ownership.” But if movies become more affordable then “the volume (of sales) can make up for whatever price adjustment that has to occur.”

PREVIOUS: 4:14 AM: Sherlock Holmes: A Game Of Shadows and The Big Bang Theory on TBS helped to propel the entertainment giant’s earnings which were down — but ahead of expectations. Time Warner generated net income of $583M, down 10.7% vs the same period last year, on revenues of nearly $7B, up 4.4%. Analysts thought that revenues would come in closer to $6.8B. Meanwhile, adjusted earnings at 67 cents a share, beat the projections of 64 cents. Warner Bros did its part with revenues up 7% to $2.8B and operating income up 35% to $214M. The company credits its theatrical slate, which included Sherlock Holmes and Journey 2: The Mysterious Island, as well as rising TV licensing revenues. Revenues at the company’s cable networks at Turner Broadcasting and HBO were up 3% to $3.6B. Time Warner says that Big Bang Theory contributed to ratings improvement at TBS. Overall the unit saw subscription revenues rise 5% and ads sales jump 6%. That helped to offset an 18% decline in content revenues compared to last year when the company syndicated Sex And The City. But operating income fell 2% to $19M due in part to a $58M charge to shut a general entertainment network in India. Revenues at the Time Inc magazine publishing unit fell 3% to $773M leaving it with an operating loss of $4M vs last year’s positive $63M. The company says that ad revenues fell 5% and subscription income was down 2%. “We’re off to a great start to the year, and we’re benefiting from strong momentum for our content across our businesses,” CEO Jeff Bewkes says.