Time Warner Revenue Is Flat, Despite Cable Gains

The parent company of HBO, CNN, TNT and TBS reported revenue of $6.9 billion in the quarter that ended March 31, down 1 percent from the same period last year. Net income grew 23.5 percent to $720 million, or 75 cents a share, compared with $583 million and 59 cents a share in 2012.

“We’re off to a strong start in 2013, making us even more confident in our full-year outlook,” Jeffrey L. Bewkes, chairman and chief executive of Time Warner, told analysts. He specifically pointed to the success of the company’s cable TV business, driven this quarter by an average nightly audience of 10.7 million for the N.C.A.A. basketball tournament broadcast on several Turner channels.

But Time Warner’s legacy businesses continued to lag. Later this year, the company is expected to complete the spinoff of its Time Inc. publishing unit into a separate, publicly traded company. Revenue at Time Inc., which publishes Time, People, Sports Illustrated and InStyle, fell 5 percent to $737 million, reflecting an 11 percent dip in subscription revenues.

Time Inc. eliminated roughly 6 percent of its total worldwide staff of 8,000 in the first quarter, resulting in $53 million in restructuring and severance charges. “We remain very focused on taking costs out of the business,” said John K. Martin, chief financial and administrative officer at Time Warner. Cost cutting, he added, is “an important step in preparing Time Inc. to function as a stand-alone public company.'’

Revenues at the Warner Brothers studio fell 4 percent to $2.7 billion, while operating income increased by 23 percent to $263 million. “Both ‘Gangster Squad’ and ‘Jack the Giant Slayer’ fell below our expectations,” Mr. Bewkes said.

He remained optimistic about the studio’s slate of upcoming films, including “The Great Gatsby” and “The Hangover Part III.” Warner Brothers had a strong television season with “Revolution,” an apocalyptic drama on NBC, and “Game of Thrones,” the HBO fantasy series that averages 13.4 million viewers per episode.

Mr. Bewkes defended CNN under the leadership of Jeff Zucker, the recently named president of CNN Worldwide. But, he said, the channel still needed to evolve from a trusted source of breaking news to a more regularly watched outlet. “CNN can’t just be politics and wars,” Mr. Bewkes said.

He rebuffed questions about whether the HBO Go on-demand app would be made available on an à la carte basis through a broadband connection, making the premium cable channel more like the streaming service Netflix. “We would do it if we thought it was in our economic best interest,” Mr. Bewkes said. “At this point, we don’t think it makes sense.”

Bits Blog: Time Warner Cable to Charge Modem Rental Fee

1:45 p.m. | Updated Adding more details about buying a modem.

Time Warner Cable, the big broadband and cable provider, is planning to start charging customers a monthly fee of $3.95 for renting a cable modem from the company. It said in notifications mailed to customers this week that the new fee would go into effect over the next two months.

Internet customers who want to avoid the monthly fee can purchase a modem of their own and have Time Warner Cable activate it. The company has published a list of approved modems on its Web site. The compatible modems cost between $50 and $137 on Amazon.com.

A message that Time Warner Cable mailed to customers.

Time Warner Cable lists two main types of modems that people can buy: Docsis 2.0, which works with lower-end, slower Internet services, or Docsis 3.0, for the more expensive, faster packages. For budget-conscious consumers who buy the $50 modem, it will take a year to break even.

But many consumers who are less tech-savvy are unlikely to go through the hassle of purchasing and installing their own modem, so the policy change will probably lead to a big boost in revenue for Time Warner Cable.

The company said the new fee was necessary to make up for the cost of distributing and replacing cable modems over time.

“As we continue to deploy more and more cable modems, many of these modems need servicing or replacing, get damaged and some are not returned,” said Justin Venech, a spokesman for Time Warner Cable.  “The monthly lease charge will allow us to service or replace the equipment as needed and helps provide a better user experience.”

Though most Time Warner Cable customers have not had to pay to rent modems in the past, these types of leasing fees are a common practice among Internet providers. Comcast, another broadband provider, charges a modem rental fee of $7 a month.

Warner Bros. Announces The Hobbit Games

Warner Bros. has partnered with Kabam to create two free-to-play games inspired by The Hobbit for the web and mobile devices.

Both The Hobbit: Kingdoms of Middle-earth for mobile devices and The Hobbit: Armies of the Third Age for web browsers will be multiplayer strategy games, due out in Autumn 2012.

The Hobbit: Kingdoms of Middle-earth will task players with building and managing their own kingdom in Middle-earth, including joining with other players to engage in war, while The Hobbit:  Armies of the Third Age will offer gamers strategic combat, whilst controlling iconic characters including Bilbo and Gandalf at the head of an army of Elves, Dwarves or Orcs.

Warner Bros. senior VP of Digital Games Greg Ballard said, "We are very pleased to work with Kabam in creating immersive free-to-play online games on massive scales across multiple platforms. Kabam’s Armies of the Third Age and Kingdoms of Middle-earth will be an excellent way for The Hobbit film fans around the world to delve more into the iconic story and interact with the characters in the universe."

Anyone wishing to register for the upcoming beta for Armies of the Third Age can do so now at the game's website.