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Time Warner: Hulu should be pay only

May 3, 2012

Hulu should require viewers to have a cable subscription, Time Warner CEO Jeff Bewkes suggested at the company’s Q1 2012 earnings report.

“We think Hulu authenticating makes sense,” he added. “We think Hulu is heading in the right direction now and it might continue to be viable.”

HBO Go is having “a significant positive impact” on Time Warner’s business and 93 percent of users say Go makes them more loyal to HBO, Bewkes said. Consumers using HBO Go are watching HBO more than they used to, he claimed, and HBO Go will launch on more platforms soon — it will “become widely accessible on connected TVs.” Microsoft’s Xbox Live added HBO Go in March.

Bewkes said that UltraViolet, the digital cloud initiative being jointly launched by Hollywood’s major studios is still in its early stages, “but consumers are downloading and streaming in very large numbers…More than 2 million accounts have been created and 5,000 titles are available.”

TW first-quarter earnings fell 11 per cent, but adjusted income beat Wall Street’s expectations on the strengths of the company’s television and movie studio businesses. It had net income of $583 million in the first three months of the year, compared with $653 million a year earlier. Both translated to 59 cents a share because the company now has fewer shares outstanding.

Excluding one-time factors, including charges related to a decision to shut down a TV network in India, Time Warner had adjusted income of 67 cents a share. That’s better than the 64 cents expected by analysts surveyed by FactSet. The New York-based company’s adjusted income a year ago was 58 cents.
Revenue grew 4 per cent to $7 billion, ahead of expectations of $6.82 billion.

Time Warner’s cable TV networks, which include CNN, TBS, TNT and HBO, saw revenue grow 3 per cent to $3.6 billion. The company benefited from strong ad rates, better timing of the March Madness basketball games and higher fees collected from US. cable and satellite TV distributors to carry the channels. That was offset partly by a decrease in content revenue; last year’s quarter got a boost from licensing HBO’s “Sex and the City” to other cable outlets in the US.

At the Warner Bros. movie studio, a stronger slate at the box office contributed to a 7 per cent revenue increase to $2.8 billion. The division also benefited from higher licensing revenue of TV shows and the video-on-demand availability of a television series, but revenue from DVDs and other home entertainment sales fell.

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