A Preview of Time Warner Earnings: Bummer at AOL, Bummer at Magazines–Just a Bummer
When Time Warner reports its second-quarter earnings tomorrow morning, before the markets open, most Wall Street analysts are not expecting much from the media giant, as it continues to slog toward a rejiggering of itself.
Time Warner (TWX)–which owns assets like the Warner Bros. movie studio, the AOL online unit, the HBO and Turner cable television networks and Time Inc. magazines–is expected to earn 37 cents per share, compared to 72 cents a year ago, according to a poll of analysts from Thomson Reuters (TRIN).
Revenue is expected to be $6.97 billion, down from $11.56 billion in the same quarter last year. This drop is mostly due to the March spinoff of its cable unit, Time Warner Cable.
With movies like “The Hangover” and the sixth in the series, “Harry Potter and the Half-Blood Prince,” doing well, there is some strength at Time Warner.
But the advertising market has been weak all over, which hits the company hard.
That’s why both AOL and the magazines are expected to keep up their drag on Time Warner’s financial prospects–at least until the November spinoff of the online unit.
Until then, most expect another miserable quarter from AOL advertising revenue. Sources noted that any turnaround won’t show till end of year at the earliest, due to the weak economy and a retooling of the company and its sales force.
That restructuring is not over, most agree, with expectations of more layoffs of some of its 7,000 employees coming. With the 100-day overview by new CEO Tim Armstrong now over, sources said, the staff size is likely to be adjusted accordingly.
Most also expect to see continued weakness at the long-suffering Time Inc. magazine division.
People outside the company think that Time Warner CEO Jeff Bewkes will want to sell or spin off Time Inc. once AOL is done.
And people inside the company talk about the fact that Time has some 125 titles, although most of the revenue and profit only come from a few titles, such as People, Sports Illustrated and Time.
According to sources at the magazine division, talk of a new round of layoffs has also been also circulating there of late.
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