Tags: media | earnings | profit | gloom

Big Media's Profits Defy Gloomy Outlook, for Now

Wednesday, 03 Aug 2011 02:03 PM

Big media's results are holding up well in the face of a bleak economic outlook. Now, the question is how long can they outrun high unemployment, a lousy housing market and low consumer confidence?

Comcast Corp., Time Warner Inc. and CBS Corp. beat Wall Street forecasts because of a mix of content licensing deals, movie box office receipts and advertising growth.

But shares in Time Warner, parent of CNN, HBO and Warner Bros, fell as much 4.5 percent after Wednesday's results as investors seemed less than impressed by its marginal increase in its forecast for the year.

Comcast shares were down 1 percent after its report, while CBS, which issued results late Wednesday, fell about 1.5 percent. Viacom Inc., Walt Disney Co. and News Corp. have yet to report results.

The chief concern among investors is whether insurance companies, retailers, restaurants and phone companies will keep spending on big advertising campaigns.

"We don't see any signs of a deceleration right now," said Steve Burke, chief executive of Comcast-controlled NBC Universal. "We are obviously concerned about the economy the way you would expect us to be; but so far the advertising market continues to be strong."

NBC Universal saw advertising sales at its cable networks rise by 10 percent, while ad sales at its NBC broadcast network rose by 7 percent.

"Advertising got so badly hit in 2008 and 2009 during the recession that advertising still has room to return to a normalized level to GDP," said Evercore Partners analyst Alan Gould. "Ad sales should do OK through the end of the year, driven by autos, especially as Japanese auto makers come back."

A BETTER PLACE

Time Warner's ad sales rose 9 percent at its cable networks, but rose only 2 percent at its magazine unit. CBS' ad sales rose 3 percent across TV, radio and outdoors.

"Given the weak economy, it raises concerns for... the future of the advertising market. For now, ad markets remain healthy with a note of caution," said Chris Marangi, portfolio manager at Gabelli Multimedia Funds, which owns media stocks including Comcast and Time Warner.

"Most media companies are in a better place to weather an ad decline than they were in 2008," he said.

Comcast also must contend with customers canceling cable service because of lost jobs or lost homes, or because they went with cheaper Web video services like Netflix Inc.

Comcast lost 238,000 basic video customers in the quarter, but added 144,000 Internet and 193,000 phone subscribers. Its chief cable rival, Time Warner Cable lost 128,000 video customers during the quarter.

Comcast's customer numbers "were pretty good, though basic video losses remains a concern for investors," said Collins Stewart analyst Thomas Eagan. "We're close to the broader pay-TV market being flat to down this quarter due to seasonality and the economy."

The company cable customer additions fell in May, but recovered in June, said Comcast Cable President Neil Smit. That recovery continued into July, he said.

Comcast reported second-quarter profit of 42 cents a share, ahead of the average analyst forecast of 41 cents, according to Thomson Reuters I/B/E/S. Revenue rose 9.4 percent to $14.33 billion.

At Time Warner, adjusted earnings per share were 60 cents, ahead of the average analyst forecast of 56 cents. Revenue rose 10 percent to $7.03 billion.

© 2017 Thomson/Reuters. All rights reserved.

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Big media's results are holding up well in the face of a bleak economic outlook. Now, the question is how long can they outrun high unemployment, a lousy housing market and low consumer confidence? Comcast Corp., Time Warner Inc. and CBS Corp. beat Wall Street forecasts...
media,earnings,profit,gloom
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2011-03-03
 

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