Even among media titans, this company is a giant. Time Warner is the world's third-largest media conglomerate behind Walt Disney and News Corporation, with operations spanning television, film, and publishing. Through subsidiary Turner Broadcasting, the company runs a portfolio of popular cable TV networks including CNN, TBS, and TNT. Time Warner also operates pay-TV channels HBO and Cinemax. Its Warner Bros. Entertainment, meanwhile, includes films studios (Warner Bros. Pictures, New Line Cinema), TV production units (Warner Bros. Television Group), and comic book publisher DC Entertainment. In the magazine world, venerable Time Inc. is the top publisher of consumer titles including People, Time, and Fortune.
Time Warner's content and brands have a truly global reach. However, in fiscal 2012 more than 70% of the company's revenue came from the US.
The company is organized through three business segments: Networks (primarily cable TV networks), Filmed Entertainment (primarily movie, TV, and other content production and distribution), and Publishing (primarily magazine production). Most of Time Warner's operating units rank at or near the top of their respective industries.
With the company's Networks segment accounting for almost 50% of sales, cable TV continues to be a leading source of revenue for Time Warner. Its TBS and TNT channels rank among the most watched ad-supported channels. Time Warner's Filmed Entertainment division, meanwhile, has continued to deliver at the box office. Its Publishing business, which produces some 20 magazines in the US and 70 magazines outside the US, generates revenues primarily from the sale of advertising, magazine subscriptions, and newsstand sales.
Sales and Marketing
While the company's various media holdings earn millions through advertising sales, Time Warner itself spent $2.465 billion on advertising in fiscal 2012, after spending $2.987 billion in fiscal 2011 and $2.824 billion on advertising back in fiscal 2010.
Time Warner’s revenue decreased slightly (less than 1%) in fiscal 2012 compared to 2011. The company claimed $28.7 billion in fiscal 2012 after bringing in about $28.9 billion the previous year. The decrease was mainly due to the slight decline in revenue from the Film and TV Entertainment and Publishing segments, largely offset by the increase in revenue from the Networks segment. In fiscal 2012 the company’s Subscription revenues increased primarily related to an increase at the Networks segment. Advertising revenues were essentially flat in fiscal 2012.
Despite the relatively small revenue decrease, Time Warner's net profit climbed to $3 billion in fiscal 2012 from $2.8 billion in fiscal 2011. The profit bump in 2012 was mainly due to decreased administrative expenses compared to the previous year. Time Warner’s cash flow decreased somewhat in fiscal 2012 as a result of increased cash use for investing activities, acquisitions, and debt repayments.
Time Warner is greater than the sum total of its parts. Like other media conglomerates, the company focuses on maximizing the profit potential of its original content by distributing that material through multiple channels. For example, a film produced by Warner Bros. can be shown in theaters, aired for subscribers on HBO, and then aired again on one of its advertising-supported cable outlets. The company also uses its vast array of media outlets to cross-promote its movies, TV shows, and magazines.
The company's Networks segment has adopted a successful programming strategy: TBS has positioned itself as a popular outlet for sitcoms and other comedy programming and TNT has focused largely on airing dramatic movies and TV shows.
Time Warner's Publishing unit is working hard to adapt to the challenging environment of declining print readership. Like the rest of the publishing world, Time Warner is focused on creating digital media that is compatible with portable devices such as Amazon's Kindle and the iPad from Apple.
Mergers and Acquisitions
Time Warner has never been shy about expanding its portfolio and strengthening its capabilities through acquisitions. In 2012 Turner Broadcasting System strengthened its digital capability with the acquisition of Bleacher Report, a leading online and mobile sports property, for about $170 million.