The Harry Potter Effect: Time Warner Trumps Estimates
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Harry Potter saves the day again! Time Warner (NYSE: TWX) unveiled fourth quarter earnings of .94 per share this morning, coming in just above expectations of .87. Revenues were up 5% to 8.19 billion from 7.81 billion, higher than the estimated 8.06 billion. For the 2011 full year revenues were up 8%, adjusted operating income was up 9%, and adjusted EPS were up 20%.
Time Warner continues to repurchase shares, buying back $4.6 billion in 2011 and announcing plans to repurchase another $4 billion. Dividends were increased 11% to .26 per share, the third consecutive yearly increase for shareholders.
For the quarter, revenue strength was led by networks and filmed entertainment, with the DVD/Blu-Ray release of Harry Potter and the Deathly Hallows: Part 2 leading the pack with a 7% increase. Network revenue increased 5%, the largest increase coming from Turner Broadcasting’s higher licensing revenue. For the year, network revenue was up 9%, filmed entertainment was up 9% as well.
The publishing division of Time Warner, which owns the publication Time and People, remained flat for the year and down 1% for the final quarter.
Overall, it was a strong year for Time Warner with their focus on gaining more revenue from tightening control on content paying off. The problem Time Warner faces moving forward is being able to make up revenues without Harry Potter releases to buoy the filmed entertainment sector, and publishing continue to decline. Here's a run-down on how Time Warner measures up agains competitors in the media industry like Disney (NYSE: DIS) and News Corp (NASDAQ: NWS):
|
TWX |
DIS |
NWS |
Industry |
|
|
Market Cap (Billions) |
38.71 |
74.38 |
50.87 |
0.366 |
|
EPS (ttm) |
2.63 |
2.52 |
1.02 |
0.04 |
|
P/E (ttm) |
14.68 |
16.43 |
19.8 |
15.87 |
|
PEG (5 year expected) |
1.09 |
1.12 |
N/A |
1.03 |
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