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Time Warner Beats Street But Streamlining Ahead

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Time Warner reported first quarter earnings this morning, coming in just ahead of Wall Street expectations and CEO Jeff Bewkes reaffirmed the company's full-year outlook. Excluding one-time items profit came in at 24 cents a share, a penny ahead of expectations and two cents ahead of the year-earlier period, on revenue of $11.6 billion, up five percent from last year's quarter.

On the post-earnings conference call Bewkes emphasized his strategy to streamline the company so it's entirely focused on creating, packaging, and distributing branded content. They're part-way there.

AOL is still in the spotlight, and still very much a drag on the company. Subscription revenue dropped 29 percent, pushing operating income down 36 percent. The subscription service is a remnant of the previous strategy, as its replaced by an ad-supported model, but ad revenue grew just 2 percent in the quarter. The big news: the company has taken the financial and strategic decisions in order to split the businesses, enabling them to sell the parts. The other really weak spot is the publishing division, where despite higher reader numbers, the weak ad market pulled the division's ad revenue down 10 percent.

The movie division was one big winner, Warner Bros. posting 14 percent higher revenue, boosted by DVD sales of "I am Legend" and others. This further proves that the DVD market isn't slowing as fast as everyone had suspected, and it seems the new dominance of Blu-ray is helping things. And these results don't include the phenomenal success of "The Dark Knight" Batman sequel that opened this quarter.

Video: Time Warner Conference Call--the company's top priority will be branding entertainment.

The TV networks revenue, up 9 percent was bolstered by both higher cable subscription fees as well as 11 percent higher revenue, pretty impressive in this ad market. The Turner networks, especially TBS and TNT have overhauled their image with tons of new original programming and it seems to be working.

The stock started the day down slightly, but was trading up slightly at the time of this posting.

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