Cable, Movies Boost Time Warner in 2Q7/28/2004 6:44 AM Eastern
Time Warner Inc. saw its revenue and cash flow rise by double-digits in the second quarter, fueled by strong performances at its movie studio, cable systems and cable networks.
Revenue was up 10% in the period to $10.9 billion and adjusted operating income before depreciation and amortization (OIBDA) rose 17% to $2.6 billion. Time Warner said it generated about $1.5 billion in free cash flow this year, down slightly from the $1.7 billion it generated in the first half of 2003.
Chairman and CEO Richard Parsons said the company will use that free cash flow to grow the business, and not necessarily to repurchase stock, as some of its peers anticipated.
“When you think about the long-term, you look for ways to extend your competitive advantage and your position,” Parsons said on a conference call with analysts.
“It would not be a wise thing to say we are not interested in anything that is going on in our business and to use all of our firepower to buy back stock,” he added. “That doesn’t mean we don’t have our eye on that needle, as well. As we go forward, we will be making judgments as to what is the best way to keep the company on a path of sustainable growth, to maximize the value of the businesses we have and to maximize our return to shareholders.”
At the cable systems, revenue was up 10% to $2.1 billion, but OIBDA rose only 9%, mainly due to expenses related to its rollout of cable-telephony service. Time Warner Cable added 124,000 digital-cable subscribers and 127,000 high-speed-data customers during the quarter.
At the networks, revenue rose 10.3% to $2.4 billion and OIBDA was up 23% to $661 million, mainly due to stronger subscription and advertising revenue.
Time Warner reported a 14% increase in subscription revenue resulting from higher rates and subscribers at Turner Broadcasting System Inc. and Home Box Office. Advertising revenue was up 6% and content revenue rose 15%, primarily due to home-video sales of HBO original programming.
Filmed entertainment reported revenue growth of 12.1% and OIBDA growth of 9.2%, fueled by strong theatrical and home-video sales.
Time Warner shares fell 25 cents apiece to $16.66 Wednesday.