Time Warner Earnings: What to Watch

The Time Warner building.
Mark Lennihan
The Time Warner building.

Time Warner's stock is trading near an 18 month closing high ahead of its quarterly earnings report tomorrow morning.

The company is expected to report earnings of 48 cents per share on $6.26 billion in revenue. The bar is high - other media companies reporting earnings last week include Comcast, Time Warner Cable and Viacom , all set high expectations for strong advertising results and higher cable fees. Time Warner has far outperformed the market over the last year and a number of analysts recently upgraded the stock.

Time Warner's cable channels may not have shown the same ratings increases as some of its peers, but its cable division is still expected to drive the company's overall success. Time Warner's media networks division - its largest in terms of both revenue and earnings - is expected to grow again this quarter on stronger ad revenues and higher ratings, especially at its Turner Networks. Revenue for the division is expected to come in at $2.92 billion with $1.15 billion in OIBDA. With

Conan O'Brien

now on board for a show on Turner's comedy-oriented channel, TBS, we can expect CEO Jeff Bewkes to highlight the success.

Now there are a number of questions analysts have ready for the earnings call including; have the media networks cut their programming costs and will softer ratings keep Time Warner from fully profiting from a stronger advertising market?

The studio division is also expected to report a strong quarter, thanks to the success of movies like "Valentine's Day" in theaters and successful DVDs, like "Sherlock Holmes." Coming up Time Warner has "Sex & the City 2," "Jonah Hex" and "Inception" -- all of which could be huge this summer. But this year Warners doesn't have an installation in the Harry Potter franchise. So look out for some comments on the studio's film slate moving forward. And since Warners has the largest share of the home video business, expect some questions DVD sales trends for indications of how the industry giant is handling DVDs' decline.

Time Warner's use of its cash is another hot topic for the earnings call. The company has bid on the MGM studio, offering some one and a half billion dollars. The Time Inc. magazine division has dragged on results for years now - we'll see if CEO Jeff Bewkes reveals any plans to better monetize (or potentially sell?) that division.