Time Warner says DVD market stabilizing
PHYSICAL: Studio's theatrical/home entertainment division jumped 6% in operating income in Q3
By Susanne Ault -- Video Business, 11/4/2009
NOV. 4 | PHYSICAL: Time Warner was upbeat about its third-quarter 2009 earnings, noting improved studio performance plus stabilization of the overall DVD market.
The company’ theatrical/DVD division recorded $291 million in operating income for the three months ended Sept. 30. That marks a 6% jump from the same frame last year.
Although revenue was slightly off due to weaker DVD sales, down 4% to $2.8 billion, the decline was offset by studio cost savings initiatives. For example, within Warner Home Video, executives have worked to slim DVD shipments to retail and trim promotional costs. Also, revenue was impacted by tough comparisons to last year’s theatrical standout The Dark Knight.
“One of the reasons why we are having such a great year, under the backdrop of a tough home entertainment environment, is that we’ve done a phenomenal job in cutting costs in home entertainment,” John Martin, Time Warner executive VP/chief financial officer, said on a Wednesday conference call with analysts. “We’ve taken a much more stringent approach to shipment of goods, which has resulted in lower returns. We’ve cut marketing, but that hasn’t impacted our sell-through units.”
Time Warner CEO Jeff Bewkes spoke about the home entertainment business steadying itself, after serious declines earlier this year.
“On the long-term home video outlook, the home entertainment environment is stabilizing and will continue to into next year,” said Bewkes. “The retail environment is still challenging, with a little less shelf space for DVD. But we see pressure on physical sell-through moderate, and we do expect to see continued growth in rental, electronic sell-through and Blu-ray.”
The studio also was optimistic that the relatively strong margins enjoyed with its digital home entertainment category, including video-on-demand and electronic sell-through, will be a continued boost to business.
Overall, the Time Warner company recorded $661 million in net income, a 38% drop from last year. Total revenue declined 6% to $7.1 billion.
