Time Warner's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Time Warner (TWX)

Q1 2012 Earnings Call

May 02, 2012 10:30 am ET

Executives

Douglas Shapiro - Head of Investor Relations

Jeffrey L. Bewkes - Chairman and Chief Executive Officer

John K. Martin - Chief Financial Officer and Chief Administrative Officer

Analysts

Spencer Wang - Crédit Suisse AG, Research Division

Michael Nathanson - Nomura Securities Co. Ltd., Research Division

Benjamin Swinburne - Morgan Stanley, Research Division

Anthony J. DiClemente - Barclays Capital, Research Division

Richard Greenfield - BTIG, LLC, Research Division

Vasily Karasyov - Susquehanna Financial Group, LLLP, Research Division

Douglas D. Mitchelson - Deutsche Bank AG, Research Division

Barton E. Crockett - Lazard Capital Markets LLC, Research Division

David W. Miller - Caris & Company, Inc., Research Division

Presentation

Operator

Welcome to the Time Warner First Quarter 2012 Earnings Conference Call. My name is Hilda, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Mr. Doug Shapiro, Senior Vice President of Investor Relations. Mr. Shapiro, you may begin.

[Technical Difficulty]

Douglas Shapiro

Our 2012 business outlook. Before we begin, there are 2 items I need to cover. First, we refer to certain non-GAAP financial measures. Schedules setting out reconciliations of these non-GAAP measures to the most directly comparable GAAP financial measures are included in our earnings release and trending schedules. These reconciliations are available on our website at timewarner.com/investors. Reconciliations of our expected future financial performance are also included in the business outlook release that's available on our site.

And second, today's announcement includes certain forward-looking statements which are based on management's current expectations. Actual results may vary materially from those expressed or implied by these statements due to various factors. These factors are discussed in detail in Time Warner's SEC filings, including its most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. Time Warner is under no obligation and, in fact, expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

Thanks. With that, let me turn the call over to Jeff.

Jeffrey L. Bewkes

Thanks, Doug. Good morning, everyone. Our first quarter results put us in a great position to achieve our financial goals for the year. We grew revenue 4%. We grew adjusted operating income 6%, and we grew adjusted EPS by 16%. And while these results were very good, they understood the strength of the fundamentals underlying our businesses.

Let me give you a sense of what I mean, starting with Turner where we're seeing great momentum at many of our networks. This quarter, TBS was up over 30% in prime time in adults 18 to 49, making it the #1 network on all cable for the first time in a decade.

The Big Bang Theory is performing fantastically. It was the #1 sitcom on cable this quarter, and it more than doubled the delivery in its timeslot. And it's helping to lift ratings across the schedule.

Conan, for instance, has grown viewership for each of the past 6 months and now outdelivers every other late-night talk show in adults 18 to 34. These ratings also provide a great platform from which to launch new originals. TBS will debut several scripted comedies this year: Men at Work later this month, Sullivan & Son in July and the Wedding Band in December. And we'll add unscripted originals starting early next year. Or consider truTV that just delivered its most-watched quarter ever for men 18 to 34, and it was a top 10 entertainment network in delivery of men 18 to 49.

Cartoon Network is also showing great momentum, driven by the popularity of shows like Adventure Time and Regular Show. And lately, it's one of the only kids' networks that's growing. During the quarter in which both of our major competitors declined, Cartoon's viewership among kids 6 to 11 grew 14%. And Cartoon's sister network, Adult Swim, is also posting great numbers. It, too, just completed its most-watched first quarter ever and, again, ranked #1 among all cable for delivery of young adults demos.

The one exception among our entertainment networks was TNT where, as we anticipated, ratings remained challenged in the quarter. Nevertheless, we're confident we'll see improvements starting next month. And by the back half of this year, we expect ratings to be up over last year.

In June, we'll have the first refresh of our prime time acquired programming on TNT in several years as we begin to strip The Mentalist. We'll also debut 4 new originals shows this summer: Dallas, The Great Escape, Perception and Major Crimes. And we'll bring back some of our highest-rated originals including Rizzoli & Isles and Falling Skies, plus the final episode of The Closer.

At the same time, we're continuing to see fantastic performance from our sports programming at TNT, TBS and tru. The NBA on TNT was up for the fifth straight year, making it the highest rated in the network's 28-year history with the league. It's now abundantly clear that the delayed season did not dampen fans' enthusiasm at all.

We're also extremely pleased with the NCAA men's basketball tournament, which has exceeded in every way the expectations we had when we signed the contract 2 years ago. In addition to strong ratings, we continue to see great demand from advertisers and very strong performance from our digital properties.

On our news networks, CNN faced extremely hard comparisons against the events in Japan and the Middle East in the first quarter last year. But that's the nature of the news cycle. Propelled by its brand and global newsgathering capabilities, CNN is still the place where more viewers turn when there's hard news. That was evidenced this quarter when CNN was #1 among 18 to 34s on primary nights. And HLN was the only cable news network to see growth in prime time compared with the first quarter of 2011. It was up 7% over last year.

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