A tale of two Time Warners

bewkes2.jpgTime Warner’s first quarter results were yet another demonstration of how the one-time biggest media company on Earth is making some progress, but continues to grapple with its biggest issue — AOL.

First the good news (take-aways from the call):

    Cable networks were a standout in the first quarter, with advertising revenue rising 13 percent. The strong audience ratings have inspired it to hold its presentation to advertisers on the same week as the broadcast upfronts. Bewkes: “You may have noticed that this year, Turner’s up front is scheduled for the same week as the broadcast upfront. That is not a coincidence. We believe Turner is now positioned better than ever to challenge the broadcast networks. This argument is increasingly resonating with advertisers and agencies and we expect to see that reflected in this upfront.” Just how good is it? Consider that CPMs at Turner are about 60 to 70 percent of the prices commanded by broadcast, Bewkes said. In a quarter when Wall Street expected rivals to steal share from cable operators, Time Warner Cable stunned investors by adding 55,000 basic video subscribers. Growth in new customers came across the board. Another bright sign this year could come from a decision to shrink film release windows. Time Warner plans to release all of its films on video-on-demand and DVDs on the same day. A decision to back Sony’s Blu-ray has encouraged Time Warner to now project industry wide sales of movies on next generation format to rise about 30 percent faster than it previously thought, or about $ 1 billion in sales. Time Inc, a perennially unloved division, has rarely been a source of good news for the company. But in the first quarter, its digital initiatives helped the division’s online revenue offset the decline in print advertising. Unique visitors were up about 30 percent year over year and page views rose 25 percent.

Now the bad…

    AOL: Even as the rivals enjoy robust online advertising growth, AOL’s restructuring and “execution challenges” in trying to integrate over $1 billion worth of acquisitions hurt the first and probably the second quarter’s display advertising business. What’s also troubling to investors is that its third party advertising business, which commands lower margins, will be a bigger part of its business mix, executives said. Online ad growth will be better in the second quarter compared to the first, but 2008 profits is expected to be lower than last year. There was a small measure of relief that Time Warner has finally decided to split off its cable business, but investors were looking for much more — like news of a big special dividend paid out by Time Warner Cable to Time Warner shareholders for its troubles all these years — or any details at all. Why didn’t a single analyst ask a question about AOL’s context within the Microsoft, Yahoo bid? And none of the executives volunteered information either.

(Photo: Reuters)

Time Warner’s cable division setting sail

time-warner-center.jpgTime Warner Inc’s plan to split off its cable services division – widely expected by many and welcomed by some — raises just as many questions as it answers.

When is the split going to take place, for instance? And how? And what does this mean for AOL? Is it next up for a separation? Remember, Time Warner has already held discussions to merge the AOL unit with Yahoo Inc.

(Speaking of which, The Wall Street Journal says Microsoft could be making its next move in the takeover saga for Yahoo as early as Wednesday. One possibility: nominate a proxy slate of directors to replace the board at Yahoo. Also, Microsoft has considered earnmarking $1.5 billion to retain Yahoo employees should it win the company, Reuters says.)

Microsoft, Yahoo deadline looms

hourglass.jpgWith earnings reports for Yahoo and Microsoft out of the way, all eyes are now on Saturday, Microsoft’s deadline for Yahoo to accept its $43 billion offer.

And just in case Yahoo felt Ballmer’s comments were vague, Microsoft CFO Chris Liddell repeated: “We have yet to see tangible evidence that our bid substantially undervalues the company (Yahoo) … In fact, we see the opposite.”

Will they stay or will they go?

Alley Insider’s Henry Blodget is betting there’s a 60 percent chance Microsoft walks. After reporting a mixed quarter and below-target forecast, it’s looking unlikely Microsoft will raise its bid.

Yahoo: No surprises there

jerry-1.jpgWe weren’t expecting huge surprises during Yahoo’s earnings conference call, but CEO Jerry Yang was spectacularly vague about the Internet company’s plans vis-a-vis Microsoft or any other potential tie-ups — with Google, Time Warner’s AOL or News Corp — that Yahoo has been working on.

At the very start of the call, Yang essentially said “Don’t go there” to analysts and investors, reminding them about the purpose of the call.

“I’d like to remind you that today’s call is about our Q1 results, so please direct your questions to the quarter if possible,” Yang said.

CBS News = CNN?

CBS Anchor Katie CouricIf CBS tosses its news operation and channels that of CNN, would you care? That conundrum brings to mind a tough question for the media industry as a whole: content may be king, but does brand matter, especially with news?

The New York Times says executives from CBS and Time Warner have discussed reducing CBS’s news-gathering capacity while keeping its top personalities, such as Katie Couric, and paying a fee to buy CNN’s news feeds. Or CBS might keep its correspondents in certain regions but pair them with CNN crews. Anchors like Anderson Cooper already appear on both networks.

Variety says insiders at the two companies “downplayed” the report.

Sure broadcasting legends like Fred Friendly and William Paley may be turning in their graves, but in a world of declining viewership for network news and increased popularity of news consumed on the Web or mobile devices with aggregators like Drudge and Google News, one wonders if this is a smart cost-cutting move for CBS. CBS news is mired in last place amid the continuing struggles of Couric, who was given a $15 million a year contract, to attract new viewers, the Times said.

UPDATE: AOL’s buying spree

kickapps-logo.JPGThe ink has barely dried on AOL’s $850 million proposed purchase of Bebo, but reports of another deal are already percolating. AllThingsD’s Kara Swisher reports AOL is seriously considering buying New York-based widget-maker KickApps for $90 million.

KickApps makes widgets to order for a broad range of companies, such as a car search widget for Autobytel and a social community for Time Warner’s CW TV network’s “Gossip Girl,” Swisher says.

Investors Softbank Capital, Prism VentureWorks and Spark Capital and others have dropped $17 million into KickApps.

Disney on AOL – “NO” comment

iger.jpgNot that anyone was suspicious, but in case you’re wondering Disney isn’t buying AOL .

Iger blurted that out in response to BusinessWeek editor John Byrne’s question on stage at the McGraw-Hill Media Summit in New York on Wednesday.

Byrne: “Can we expect Disney to make another big acquisition? Would you think about AOL for example?”