Time Warner vows CNN turnaround, ads disappoint
(Reuters) - Time Warner Inc is unsatisfied with CNN's low ratings and will seek to turn around the cable news network with programming that is more compelling and stays non-partisan, the media company's Chief Executive Jeff Bewkes said on Wednesday.
Bewkes' comments, made after Time Warner reported better-than-expected earnings for the second quarter, come less than a week since the president of CNN Worldwide said he would step down. The CEO said CNN was the one exception to an otherwise strong cable-network unit, which increased quarterly revenues by 4 percent to $3.6 million.
"We are going to do a better job of putting on programming that will hold viewers," Bewkes said. "There is strong demand for objective, comprehensive, non-partisan coverage ... but we need to do it in a more compelling, more engaging way than we've been doing of late."
CNN, founded in 1980 and owned by Time Warner since 1996, has tried to hold the middle ground in its political news coverage, a position that some blame for its slip in viewership to historic lows in recent years.
Ratings have risen for competitors Fox News and MSNBC, which blend news with opinion and political commentary. The opinion programs on No. 1 cable news network Fox News skew conservative, while commentaries on MSNBC lean liberal.
Bewkes provided no update on the search for a new CNN chief.
Morningstar analyst Michael Corty said Time Warner appears to be aware of CNN's struggles and that the network may be able to reverse its fortunes.
"There is upside there. They are trying to address the issue through management changes and it is possible it could improve," Corty said.
Time Warner logged a 2 percent increase in advertising for its networks division, which includes TNT, TBS, HBO and CNN. This missed some analysts' expectations and lagged cable rivals.
Discovery Communications Inc posted a 7 percent rise in ad revenue on Tuesday while on Wednesday, NBC Universal said its cable ad revenue had risen 4 percent.
The advertising landscape will not improve in the current quarter, chief financial officer John Martin said. He told analysts on a conference call that Time Warner expects no advertising growth in the third quarter, partly because of ad dollars flowing to the Olympics on NBC's networks.
Martin said advertising growth would be much stronger in the fourth quarter with the U.S. presidential election, a new basketball season and baseball playoffs.
ENTERTAINMENT RESULTS SLIP
Revenue in the film and TV entertainment unit fell 8 percent compared with a year earlier, when it released a sequel to "The Hangover," and the home distribution of "Harry Potter and the Deathly Hallows: Part 1."
Revenue in its publishing unit, whose titles include Time and Sports Illustrated, declined 9 percent as advertising sales and subscription revenue fell.
Time Warner maintained its full-year forecast for net income to grow in the low double digits. Wall Street analysts are expecting $3.20 per share.
Second-quarter net income was $429 million, or 44 cents a share, compared with $637 million, or 59 cents a share, a year earlier.
Adjusted for charges related to the shutdown of a network in India and some TV operations in Turkey, earnings were 59 cents per share, which beat analysts' estimates by a penny, according to Thomson Reuters I/B/E/S.
Overall revenue fell 4 percent to $6.74 billion. Analysts were expecting $6.94 billion, according to Thomson Reuters I/B/E/S.
Time Warner shares rose 45 cents or $1.14 to $39.57 on Wednesday.
(Reporting by Liana B. Baker in New York; Editing by Dale Hudson, Gerald E. McCormick and John Wallace)
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