Online Strategy

Well, the future of online streaming is finally here. Many cable networks and distributors are finding common grounds to be able to protect its beloved subscriptions for free online television. Of all the cable networks attempting to come together, CEO Jeffrey Bewkes of Time Warner is heading this massive collage of cable networks. The supposed offer is to allow people to view television shows on the internet as long as they subscribe beforehand. They are trying to find a way however so that subscribers will not drop regular television. According to chief strategy officer at Time Warner Peter Stern, “The vast majority of broadband subscribers are already paying for a multichannel TV service. If we give [online TV] to them for free, some of them will stop subscribing to a multichannel TV service." Once this is resolved, the cable networks will be able to release subscriptions for many viewers so that they can watch their favorite television shows online in case they were to miss the original screening.

Worden, Nat. "Cable Executives Warm Towards Online Plan for TV Subscription." April 2, 2009.
http://news.morningstar.com/newsnet/ViewNews.aspx?article=/DJ/200904021005DOWJONESDJONLINE000712_univ.xml

Huge Investment Decision for Time Warner

As of Monday, March 23rd, Time Warner has decided to invest $241.5 million in Central Media Enterprises which is a TV outlet in Europe. The company labeled CME is a broadcaster in Bulgaria, Croatia, and the Czech Republic and Time Warner is fortunate enough to hold a thirty-one percent stake in the company. The astounding amount of money that will be invested by TW will get them two seats on CME’s board.
With this newest decision, CME has also found a way to make a partnership with Time Warner Bro’s movie studio to launch and operate Warner-branded channels in the company’s areas. This channel will constantly run feature international films and television series. Thanks to the spinoff of the cable unit, time Warner is expected to receive $9.25 billion and will consider to acquire future international companies. CEO Jeffrey Bewkes released a statement on the acquisition in saying, “While the (Central European) region has been experiencing the impact of the global economic crisis, we believe CME is ideally positioned over the long term as Central and Eastern Europe returns to significant growth and the media sector in these countries continues to evolve.”
This once again demonstrates Time Warner’s ability to survive and succeed through the economic downturn that we are facing. With almost ten billion alone in expected television profit, they will make a ton more than that with their feature films that citizens are still flocking to see. Of course there is some risk in this partnership due to the overseas liability with CME. Considering they are now in a partnership, Time Warner now must focus on CME’s possible path to success as well with hopes that both sides are satisfied.
Adegoke, Yinka. "Time Warner Buys Stake in Central European media co." March 23, 2009.
http://www.reuters.com/article/americasDealsNews/idUSTRE52M2Y220090323

"Watchmen" Gives Boost

Time Warner’s Warner Bros. has once again hit the jackpot with the mega-movie “Watchmen.” Over the weekend the film produced $55.7 million at the box office in its first opening weekend. Although it was about five million less than expected, these numbers are still extremely impressive considering economic conditions. Films usually perform well during economic downturn however for a number of reasons. “The movie industry often performs well during times of economic downturn, in part because a night out at the movies can cost less than rival forms of entertainment such as concerts or professional sports events” (Schuker). President of the media, Paul Dergarabedian also made a statement regarding the recent success of the movie-going business. "We've been carrying this momentum forward since Christmas of last year and the 'Watchmen' weekend kept it going, Whatever is coming out in the theaters, audiences are lining up to see it. Recession-era moviegoing is in full swing.” Many believe the film would have made more had it not been so long. A film with a run time of two hours and forty minutes means less screenings for more tickets to be sold.
While this is good news for Time Warner I disagree with Schuker’s opinion on the movie industry. While the industry is usually recession proof, I believe it is more successful because of the form of escape. People are able to engulf themselves in film instead of dealing with reality at home. The reality at the theatre is far different from what it used to be. A trip to the movies is about twenty dollars nowadays at the least. Ticket-$11, popcorn-$5, water-$5.

Schuker, Lauren. “'Watchmen' Keeps Ticket Sales On Hot Streak at Movie Houses.” March 9,
2009. http://online.wsj.com/article/SB123653679431864173.html?mod=wsjcrmain.

India Market update

Turner International, a company owned by Time Warner announced that one of its precious market’s, the Indian market is expected to have a slower growth in profit than the record year of 2008. President of Turner International Asia-Pacific Stephen Marcopoto stated “The last calendar year was a record year for us with growth in the high teens.” Expectations of this year will be a high single digit growth which is a bit more than half of what they recorded last year. Although India is the biggest market for the company, lower advertising revenue is the reason to blame the decreased projected year. While announcing this unfortunate piece of news to the media, Marcopoto essentially saved himself by saying, “I can't stress just how dynamic and resilient the Indian market is... it is healthy compared to some other markets which are struggling with low or flat growth” (Marcopoto).
Marcopoto made a great move by encouraging stakeholders, stockholders, and people interested in the company with his second statement. The Indian market will also see his boost of confidence in them and will surely continue to engage with Time Warner financially.

Luthra, Nitin. "Turner Expects its Idia Growth to Slow." March 4, 2009.
http://online.wsj.com/article/SB123616138247127981.html?mod=msn_money_ticker&ru=msn_money

Great Idea

Turner Classic Movies, a Time Warner owned company will turn its spotlight on the depiction of Latinos in past and contemporary Westerns through the month of May. In a statement made by Vice President of programming, Charles Tabesh said “As has been shown in our past RACE AND HOLLYWOOD editions, the way in which Hollywood depicts different cultural groups can have a tremendous impact on how those groups are viewed in society as a whole.” There will also be different themes for each day that films will be shown such as musicals, interracial relations, and will view border towns and small ethnic towns. These films include “The Milagro Beanfield War” (1988), “La Bamba” (1987), “The Mambo Kings” (1992), “Stand and Deliver” (1988), The Ballad of Gregorio Cortez” (1983), and “Lone Star” (1996).
The decision to use these themes is very important for Time Warner’s reputation. This reflects positively on their reputation and should gain more interest from publics. This also increases interest from different ethnicities even as a minority. By acknowledging every ethnicity in film, each group can be satisfied in watching these films. It is also a learning experience for them as each group progresses through time in America.

Schmitz, Sarah. "Turner Classic Movies to Look at Latino Images in Film in Latest Edition of Race and Hollywood in May." February 11, 2009. http://online.wsj.com/article/PR-CO-20090211-906774.html?mod=wsjcrmain.

New Chairman for TW Cable

Time Warner Cable replaced chairman Don Logan, who will remain on the board with Chief Executive Glenn Britt. This move was made because Time Warner Cable is separating from Time Warner later in the current quarter we are in. The company plans to focus more on movies, TV programming and magazines with hopes to make the company more competitive. This is a huge move because Time Warner Cable owns an 85% stake in the main company. With this split, Jeff Bewkes (CEO of Time Warner) will be leaving the board of the cable division. In a statement made by Britt, he said “The board has benefited greatly from Jeff's contributions and from Don's leadership during his tenure as chairman. I thank them both for their service and look forward to working with Don as he continues to serve as a Director.”
With this being a major split from the company, the move is to save Time Warner which actually fell ten cents two days ago. The move is so each division becomes more efficient and is able to focus on separate goals from one another while still benefitting from each other. I believe it was a good move but we shall see the results of the split by the time the final quarter rolls around.

Farrell, Mike. "Time Warner Cable Names Britt Chairman." Feb 18, 2009.
http://www.multichannel.com/article/174457-Time_Warner_Cable_Names_Britt_Chairman.php

Warner and High Expectations?

With the economy in such a horrendous downfall, it is hard to believe any organization could have a positive outlook for 2009. Time Warner however recently released the expectations for the 2009 season revealing an expected profit. This however will come in lieu of plenty of job cuts even from Time Warner’s cable division that was the least prone to the economy but still not immune. Cutting nearly three percent of its total work force is the general goal for the upcoming year. The three percent will serve as a total loss of 1,250 jobs. Chief executive of Time Warner Cable Glenn Britt stated “We’ll market our services aggressively, asserting our competitive advantages” who also said the company is cautiously increasing its marketing spend in the current quarter from the previous period. Although Time Warner Cable overall lost money, they actually posted gain in the fourth quarter that just ended by adding 44,000 new digital video subscribers, 113,000 high-speed internet subscribers and 137,000 phone subscribers according to Forbes.com.
With this report, Time Warner better be careful in releasing these reports. Although it is important to have a high confidence level, I believe it is important to let the readers and stakeholders know that these figures are at an “at best” level. In doing this, Time Warner will not let their supporters down if anything were to happen to downgrade these figures.
Adegoke, Yinka. “Time Warner Cable to cut 1,250 Jobs, Sees 2009 Profit.” February 4, 2009. http://www.forbes.com/feeds/reuters/2009/02/04/2009-02-04T223621Z_01_N03548659_RTRIDST_0_TIMEWARNERCABLE-UPDATE-3.html.

Quite a Loss

After laying off approximately 10% of AOL employees at Time Warner, they announced a loss of $16 billion. Unfortunately, Time Warner’s divisions of filmed entertainment, AOL, and publishing revenues dropped three percent from a year ago. These were partially offset however from a slight gain in its cable and networks businesses. CEO Jeff Bewkes made a proper statement of the company by saying, “we'll strengthen our balance sheet, improve our strategic flexibility and return capital to our stockholders on a consistent basis. Through these steps, we expect to emerge from this downturn in an even stronger competitive position." Reasoning for improvement within the cable division was mainly because of CNN political spending and Major League Baseball on TBS which is of course owned by Time Warner. Overall, sports is helping Time Warner because the NBA which is also played on TBS. The main loss can be blamed for the AOL division which was dropped by 20%. Because of 2008 writeoffs mainly dealing with AOL, the hole that they have dug themselves in can be to blame. It is however good to see a positive outlook from the CEO in a time like this and to understand the downgrade but to look at it in a positive sense.

Holmes, Robert. "Time Warner Posts $16 billion Loss." February 4, 2009.

Job Cuts by Time Warner

Due to the continuous downfall of the economy, Time Warner’s online unit AOL is cutting seven hundred, which makes ten percent of all employees. Now that advertising revenue is also severely on the downfall, this gives Time Warner a second reason to make the job cuts. In making these cuts, the company hopes to refocus on the structure of the online service. In a memo written by CEO Randy Falco he states, “We’re at a pivotal point in AOL’s transformation, and need to be even more strategically focused and operationally efficient as we weather the economic storm” (Falco). The elimination of merit raises will also be eliminated from Time Warner AOL.
By merit pay, we mean "if you pay high performing workers more than low-performing ones, the former will stay and keep producing at a high level, while the latter will leave or have incentive to improve"(Colter). Some question whether or not merit raises even work but the elimination of these will be regretfully dropped. The outlook of the AOL section is not good because Time Warner has been trying to sell AOL to Yahoo. In a recent report, AOL said its ad business dropped almost twenty percent year over year. According to GOOGLE, AOL has dropped from being valued at $20 billion in 2005, to $5 billion as of 2009. This drop is a huge decrease and cannot be overlooked.
I believe Time Warner must dump AOL from their backs in order to focus on the most important part of the company which is feature films and television. People use the movies as a form of escape which means cinema is pretty much recession-proof. AOL has been decreasing at an astounding rate and has been the “piano-on-the-back” of Time Warner. The job cuts must be made and I am actually surprised that 700 employees will be let go. I would expect a larger number to be cut considering the 7,000 employees nationwide.

Falco, Randy. "AOL CEO Randy Falco's Entire Memo to the Troops on Layoffs." Jan 28, 2009.
Colter, Carolee. "Does Merit Pay Really Work?" July-Aug, 2003.

An Update on Time Warner

In order to reduce the number of outstanding shares, Time Warner has asked shareholders to approve a reverse stock split. According to "MarketWatch," After the seperation of Time Warner Cable, Time Warner's stock is actually expected to decline. By asking for a reverse stock split, outstanding shares from the seperated Cable would advance the stock. The unfortunate consequence of a reverse stock split is that it may sometimes cause shareholders to cash out so that they no longer own the company's shares.

Public relations practitioners however confidently state Time Warner's mix of businesses, including DVDs and movies, offers more resilience in a time of economic downturn than broadcast television. Because the nation is clearly in a recession at this time, shares continue to fall which indicates more of a rough road ahead.

The reverse stock split is may be Time Warner's best choice to make at this point in time because it decreases the amount of outstanding shares. As of November 20, there were 3.59 billion outstanding common shares in Time Warner. In eliminating some of these shares in the Cable television area which has been steadily dropping, the company can look forward to moving on perhaps a bit more successfully than before with the reverse stock split.