Media and entertainment giant Time Warner Inc. (TWX) Wednesday reported a profit for the fourth quarter of fiscal 2009, compared with a loss last year that included a heavy loss from discontinued operations and asset impairment charges.
On an adjusted basis, the company's earnings rose year from last year, as revenues grew 2% on higher subscription and content revenues. Time Warner also raised its regular quarterly cash dividend by 13.3% and provided adjusted earnings outlook for fiscal 2010.
The company said year-ago quarter results have been recast to reflect the results of operations of Time Warner Cable Inc. and AOL Inc. as discontinued operations, the adoption of recent accounting guidance pertaining to non-controlling interests and participating securities and the 1-for-3 reverse stock split that became effective on March 27, 2009.
Time Warner completed the separations of Time Warner Cable on March 12, 2009 and AOL on December 9, 2009 respectively.
The company's fourth-quarter net income attributable to Time Warner Inc. shareholders was $627 million or $0.53 per share, compared with a loss of $16.03 billion or $13.41 per share in the prior-year period.
Income from continuing operations was $614 million or $0.51 per share, compared to a loss from continuing operations of $6.52 billion or $5.46 per share for the prior-year quarter. Adjusted income from continuing operations rose to $651 million from $228 million in the year-ago period. Adjusted earnings per share were $0.55, up from $0.19 per share last year.
Income from discontinued operations, net of tax was $21 million, compared with a loss of $10.92 billion in the prior-year quarter. Asset impairment charges were $33 million, in comparison with $7.17 billion last year.
Time Warner also reported quarterly total revenues of $7.32 billion, up 2% from $7.16 billion in the comparable period a year ago.
For the sequential third quarter, Time Warner posted net income attributable to Time Warner Inc. shareholders of $661 million or $0.55 per share on revenues of $7.14 billion.
Commenting on the fourth-quarter results, Time Warner Chairman and Chief Executive Officer Jeff Bewkes said, "We posted strong growth in Adjusted EPS, despite the difficult economy. Our studio and networks achieved record profits, while investing even more in programming and production."
During the quarter, Time Warner's subscription revenues rose to $2.27 billion from $2.10 billion a year ago. Advertising revenues reached $1.47 billion, lower than last year's $1.59 billion. Content revenues came in at $3.34 billion, up from $3.16 billion in the prior-year quarter.
Based on business segments, Time Warner's Networks business, which includes Turner Broadcasting and HBO, reported fourth-quarter revenues of $3.1 billion, up 4% from the year-ago quarter. The company attributed the revenue growth to an 11% increase in subscription revenues, offset in part by a 22% decline in content revenues and a 4% drop in Advertising revenues.
The company's Filmed Entertainment business, Warner Bros. reported a 7% increase in revenues to $3.3 billion. The revenue growth was led by a strong theatrical release slate, including The Blind Side and Sherlock Holmes, higher home video revenues from the performances of Harry Potter and the Half-Blood Prince and The Hangover, and growth in games from the releases of LEGO Indiana Jones 2: The Adventure Continues and LEGO Rock Band, Time Warner noted.
Further, the company's Publishing business, Time Inc., posted fourth-quarter revenues of $1.1 billion, down 13% year-over-year. The revenue decline reflected a 12% decrease in advertising revenues, a 28% fall in other revenues and 6% reduction in subscription revenues.
For fiscal 2009, the company reported net income attributable to Time Warner Inc. shareholders of $2.47 billion or $2.07 per share, compared with a loss attributable to Time Warner Inc. shareholders of $13.40 billion or $11.23 per share a year ago. Income per share from continuing operations was $1.74, compared to a loss per share from continuing operations of $4.27 in the previous year.
On an adjusted basis, the company's income per share from continuing operations for the year was $1.83, an increase of 29% over last year. Time Warner was expecting 2009 adjusted earnings per share from continuing operations of at least $2.05 per share.
The company's full-year revenues were $25.79 billion, 3% lower than $26.52 billion reported in fiscal 2008, reflecting lower revenues at the Publishing and Filmed Entertainment segments.
On average, analysts polled by Thomson Reuters expected a profit of $1.79 per share on revenues of $25.57 billion. Analysts' estimates typically exclude one-time items.
Among others in the sector, News Corp. (NWS, NWSA) yesterday reported a profit for the second quarter over a net loss last year, driven by double-digit revenue growth at majority of its business segments, as well as the absence of hefty impairment and restructuring charges recorded in the previous year.
Another peer, Walt Disney Co. (DIS), which has completed its acquisition of renowned character franchise company, Marvel Entertainment Inc., is scheduled to report its first-quarter results on February 9. The Street expects earnings of $0.39 per share on revenue of $9.61 billion for the first quarter.
Viacom Inc. (VIA, VIA-B) will report its fourth-quarter results on February 11. Analysts are looking for earnings of $0.87 per share on revenue of $4.23 billion for the fourth quarter.
In a separate press release, Time Warner announced that its Board has approved a 13.3% increase in the company's regular quarterly cash dividend to $0.2125 per common share, payable in cash on March 15 to stockholders of record at the close of business on February 28. On an annual basis, Time Warner's regular cash dividend on its common stock will grow to $0.85 per share from $0.75 per share.
On August 1 2007, Time Warner had announced a $5 billion stock repurchase program. As of January 1, 2010, approximately $1.0 billion is remaining on this repurchase authorization. Time Warner stated that its board on January 28 increased this amount to $3 billion.
Looking ahead, Time Warner expects its fiscal 2010 growth rate in adjusted income per common share from continuing operations to be in the mid-teens, off a 2009 adjusted earnings per share base of $1.83.
TWX is trading at $28.15 on the NYSE, down $0.36, on a volume of 5.13 million shares. For the 52-week period, the company's shares traded in a range of $17.81 - $32.85.
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