Time Warner 3Q16 Earnings Call Notes

Time Warner (TWX) Q3 2016 Results
Jeff Bewkes

Combining with AT&T is the natural next step

“As you know, on October 22 we announced our agreement to be acquired by AT&T for $107.50 per share of Time Warner, and that will be half in cash and half in AT&T stock. That represents a premium of more than 35% over our trading price on October 19. This transaction is an excellent outcome for our shareholders and it’s an excellent opportunity to drive long-term value into the future. We believe combining with AT&T is the natural next step in the evolution of our business and it’s one that allows us to significantly accelerate our most important strategy.”

13m people watching west world

“More than 13 million viewers have tuned in to the premier episodes of Westworld so far and that exceeds the first episodes of Game of Thrones and True Detective”

I’ll still be here for a while

” First of all, I’m not going anywhere, and we’ll be here through the closing and into quite a period of transition after that, and then Randall and I will figure out what’s the best way to go over the long run. The same is true of our division heads and all of our top execs, so whether it’s John, Kevin and Richard and all the teams they lead. And then think of our creative partners, not just our programming development execs inside the company, but all of our very, very important – most of the creative input comes from outside the company in partnership with us.”

Randall and AT&T execs understand the need to keep this company excelling

“That’s the essence of Time Warner, and if you listen to Randall, and I’ve talked to him and all his top management for quite some time now, they are very understanding of the need to keep this company excelling and growing, and it doesn’t just mean the ongoing momentum of all of our execs and the Time Warner people, it means continuing to be the leading place which we think we are at Warner, at Turner, and at HBO for creative partners outside the company who know that if you come here, we not only have a culture to make the best out of your project, but we have the resources and the distribution ability, and now with AT&T, an enhanced ability to innovate, bring them new forms and an even stronger platform to fuel all these innovations.”

Richard Plepler

more isn’t better only better is better

” So if you look at our split, first of all, this gets obscured a lot. We have four Hollywood movies studios which make up over 70% of viewing, 68% of on-demand viewing. It’s a huge part of our offering. And if you continue to look at the usage, it goes up 92% for, example of HBO subscribers watch a movie at least once a month. When you then migrate over to original programming, I’ve said this before, it’s absolutely true, more isn’t better, only better is better. We’re not trying to just spend money. We’re trying to spend money thoughtfully to differentiate high-quality programming and build more consumers and build more addicts (55:30) across our subscriber base.”

Time Warner 2Q16 Earnings Call Notes

Time Warner (TWX) Jeffrey L. Bewkes on Q2 2016 Results

Investing in Hulu

“This morning, we announced another exciting next step in that strategy, and that’s our investment in Hulu. This investment fits our strategy like a glove. It will increase our company’s exposure to the secular growth in over-the-top services, and it will give Hulu more resources to offer consumers more shows and more choices, fostering competition and innovation amongst both SVOD services and among MVPD services. We also announced that the virtual MVPD service Hulu expects to launch early next year will include live and on-demand access to the full suite of Turner networks. Consumers clearly want innovative interfaces. They want more robust on-demand capabilities, and they expect a greater variety of content packages. And we want to support services that do just that.”

CNN is the most watched news network

“Demand in the upfront was particularly strong for CNN, which has undergone nothing short of a renaissance over the past few years. To date, 2016 is the most-watched year in CNN’s history and as the US presidential election draws closer, CNN continues to gain momentum and take share from its peers. CNN was the number one news – let me say this very clearly, CNN was the number one news network among adults 18 to 49 in prime time for the third consecutive quarter, and CNN Digital becomes the number one news service in multi-platform and mobile uniques.”

Kevin Tsujihara – Chairman & Chief Executive Officer, Warner Bros. Entertainment, Inc.

CW is a unique asset

The CW is the unique asset, because you don’t – not only do you not get material retrans, but we also don’t own any. Time Warner doesn’t own, but CBS owns some but predominantly don’t own the station group that it’s being played on. And therefore it has slightly different economics than the other broadcast networks. But what we did was actually give The CW more stacking rights by giving it exclusivity in the year. It has a lot more flexibility in its ability to be able to convey a full season or any number between a full season and five episodes. So it can do, it has a lot more flexibility than it had in the prior deal when The CW had a Hulu in-season deal and a Netflix out of season deal.

SVOD is a better platform for more controversial subjects

“Hi, Rich. It’s Kevin. As it relates to the Chuck Lorre show that we announced going to Netflix, that was really a matter of the subject matter really lent itself to SVOD. Being related to marijuana usage and a marijuana kind of background, it really didn’t really lend itself to advertiser-friendly broadcast networks.”

John K. Martin – Chairman & Chief Executive Officer, Turner Broadcasting System, Inc.

Thinking of virtual MVPDs a the same as traditional partners

Thanks, Rich. It’s John. I’ll start. Listen, I think philosophically the way we’re looking at the potential new entrants, the virtual MVPDs, the Slings, whatever you want to call them, is we’re looking at them in the exact same way as we’re looking at our traditional facilities-based partners. And we have a highly concentrated portfolio of very valuable networks that we intend to get full value for over time, and one of the reasons why we’ve been able to garner significant pricing increases is we’ve been starting from a lower base. But you should assume that the deals that we’re striking with respect to everyone carries with it similar rate card assumptions and accelerants.

Excited about eSports

“With regard to eSports, which we just concluded the championship of the tournament, we couldn’t be more pleased and excited about how we hosted the first-ever eSports tournament on television. We call it ELEAGUE, and across the 10-week tournament between Twitch and TBS, there was almost approaching 1 billion minutes of consumption. It’s brought millions of new viewers to the network. The age of the viewers of TBS are right down the strike zone of what we were hoping for: young viewers, heavily skewing male. We just announced an agreement with a new game, Overwatch. We’re going to host that tournament beginning in the fall, and we’ve announced the second tournament with Counter-Strike, which will air after that. So we love the fact that we own this league in connection with WME and IMG. We think it’s a huge area of secular growth. We absolutely intend to participate in a big way in this area, and we couldn’t be more pleased with how the first season proceeded.”

Time Warner (TWX) CEO Jeff Bewkes Interview

Time Warner (TWX) CEO Jeff Bewkes on what he views is the biggest threat to paid TV right now

“There’s a question of whether programming is being devalued. What is the economic sustainability of something that uses a lot of bandwidth and doesn’t pay for it and that runs a lot of expensive programming and essentially doesn’t have a profit? Think of Amazon or Netflix. The usual reason companies are funded or valued on the stock market for not having a current profit is because the investors believe there will be a future profit. That means they believe the market leadership position is going to turn into something that is unassailable enough—in other words, that does not have enough effective competition—that it can either cut costs or drive revenue and make a profit.”

Time Warner (TWX) CEO Jeff Bewkes on how he views Netflix competing with HBO

“I think the question is: How has the strategy of HBO created the strategy of Netflix? HBO is the original subscription video-on-demand company. We were repurposing first-run movies, and then we added original programming. We had a colleague in the industry, [Netflix Chief Executive Officer] Reed Hastings, who decided to do the same thing and put it over broadband. Since they’re on broadband, they can do it according to net neutrality without paying for the usage. And because broadband allows for two-way interactivity, you can get data on what people are watching and start a conversation. If you watched this, you might like that. That’s a great innovation. That’s exactly the kind of thing where you could take not just Netflix but all of Silicon Valley and harness those abilities to do global, at scale, distribution. That’s a tremendous boon to an industry producing more and more programming. If you don’t have a way to search and have recommendations based on other things you’ve watched, you couldn’t figure out what the hell to look at, because there’s too much! I think it’s going to reinvigorate the television industry.”

On what the cable-TV bundle will look like in 10 years

“There will still be the cable bundle we know now, which is the full monty with hundreds of channels, live news, sports, niche, etc. You’ll see for that big bundle and for the more focused bundles—whether it’s what interests you have or what price point you want to pay—you’re going to see the core channels represented across all of them, and you’re going to see full video on-demand and very good search recommendation and navigation engines, so consumers know what the programming is and where to find it.”

On the escalating costs of sports programming

“The cost of sports rights will continue to increase. The question is whether they increase at the same rate. They were increasing 15 to 20 percent in the last eight or nine years. Football has been the mainstay. That’s where a lot of the money is, and it mostly goes to the four big broadcast networks. The one that’s growing fastest globally and in the U.S. and in the young demographic is basketball, which is why we picked the championship pieces of the NBA and NCAA. Those were serious investments, but our affiliate revenue growth in relation to those sports costs is very positive, so it’s an increasing margin.”

On whether he would sell the company 

“It’s not up to me. The obligation of every ethical management is to make sure we optimize the long-term value of the company. We’re growing the company. We’ve grown the company at 25 percent a year in earnings for the last eight years. That’s a lot higher growth than the S&P. We’re essentially outperforming every other media company with the exception of CBS. When people talk about potential suitors showing up, that’s because there’s not a Sumner Redstone or Rupert Murdoch or [Comcast CEO] Brian Roberts who own the blocking shares. That’s why they talk about it. It’s not because there’s a performance issue. If somebody offers something to our shareholders that’s better than our earnings track, obviously we would try to consider what’s best for our shareholders. We’re a pretty big company. It’s expensive. I don’t anticipate being interrupted.”

 

 

 

Source: Bloomberg Interview http://www.bloomberg.com/news/articles/2016-08-02/jeff-bewkes-thinks-cable-s-future-is-fine

Time Warner (TWX) CEO Jeff Bewkes

Time Warner (TWX) CEO Jeff Bewkes explained why his company doesn’t need to do a merger or acquisition in order to compete in today’s evolving media landscape

“After all the failures of Time Warner 10 years ago and 20 years ago, HBO, Turner, and Warner Bros finally have the experience and shared interest to help each other succeed.  We have the brands, we have the money, we have the distribution platform support, and we have the program supply. We have better access to movies and TV shows than any other company probably other than Disney. We can use our scale together, or not, and that balance is one of the biggest advantages of our company.”

Time Warner (TWX) CEO Jeff Bewkes on why traditional cable providers were too slow to understand the transition to over the top video

“They bungled it.  By and large, the incumbent distribution system was too slow to give the consumers what had already been invented. They had the programming; they could have offered it in an effective way to consumers who would have watched. Instead, MVPDs let consumers go to alternatives for the very same programming they already had, because consumers wanted it on VOD and with a great interface.”

Time Warner (TWX) CEO Jeff Bewkes said people still love TV content

“There has never been more interest or vibrancy in television and the relationship that audiences have to it.  It really is the Golden Age.  Great content will carry the day.”

 

 

Source: Variety interview with Time Warner CEO Jeff Bewkes http://variety.com/2016/tv/features/jeff-bewkes-time-warner-merge-1201794546/

Time Warner 1Q16 Earnings Call Notes

Jeffrey L. Bewkes – Chairman & Chief Executive Officer

25% adjusted EPS growth on 3% revenue growth

“Revenues increased 3% to $7.3 billion, and adjusted operating income grew 11% to $2 billion. Adjusted earnings per share grew 25% to $1.49 per share, and we also returned over $1 billion to shareholders in share repurchases and dividends.”

CNN doubled its primetime audience

“Nowhere is Turner’s transformation more evident than at CNN, which more than doubled its primetime audience in the first quarter. CNN’s ratings benefited from its own reliable coverage of the U.S. presidential race as well as from its continued success with original series. Those two areas overlapped in Race for the White House, which premiered as the most watched CNN original telecast ever.”

HBO was the first SVOD service

” if you think about subscription VOD, it’s been an opportunity that started with the first SVOD service, which is called HBO, a long time ago.”

John K. Martin – Chairman & Chief Executive Officer, Turner Broadcasting System, Inc.

Television is experiencing a resurgence in the mind of brand advertisers

“”With respect to the upfront, I just would reiterate the enthusiasm that Howard suggested, which is that given the strong scatter where we’re seeing some of our inventory sell for upwards of 30% to 50% higher than last year’s upfront levels. And given low cancellations, we think all signs point to, frankly, the best upfront we will have seen in years. And we think our networks stand to gain at least our fair share of what happens in the upfront. And we think it spells very, very well for just television in general, as television is experiencing resurgence in the minds of brand advertisers, as we’re delivering reach and increasing targeting and audience capabilities. So we’re very, very optimistic.”

There are too many networks in the US

“Can I just say one thing? There are too many networks in the United States. And we’ve been saying for years that there’s going to be a rationalization of those networks. So as you think about subscription trends going forward, I think there are going to be increasingly differentiated subscription trends, meaning that marginal or lesser-valued networks are going to find it very difficult to keep their footing and keep pace with the best networks.”

Richard L. Plepler – Chairman & Chief Executive Officer, Home Box Office, Inc.

A successful HBO show is about elevating the brand

“On your question of how we gauge a successful show, look, it’s largely about whether we think something is elevating the brand, and that’s obviously a subjective judgment that we make all the time. It’s not so much about rating as whether or not it’s serving what we think is its design purpose to affect resonance with a particular part of our consumer base. So as I said earlier, it’s all about developing a kind of engagement with our subscriber. Some people are going to look at Real Sports with the same degree of passion that other people look at Bill Maher or John Oliver. Some people are going to look at Veep with the same passion that other people will look at Silicon Valley. So this is a very subjective determination. We’ve been doing it for a long time. We think we have pretty good instincts about how to build a large variety in our slate which appeals to a huge part of our consumer base. There’s no exact science to it”

Time Warner 4Q15 Earnings Call Notes

Time Warner (TWX) Jeff Bewkes on Q4 2015 Results

Consumers want flexibility to watch their shows on demand

“We are not ideological about syndication windows, that depends on evolution and a lot of factors. But I think the overriding point everybody ought to focus on is that it is becoming crystal clear that consumers want the ability to watch their favorite show, their favorite network on demand across whatever platform they are watching, whatever window it is, whether it’s a new show, current season, whether it is one- or two-year-old show they want to see it on demand. We want to make sure our networks have the flexibility to meet that consumer demand.”

If windows get broken down it’s good for HBO

“It’s good for HBO; however, that ends up. And one of the reasons is if films get more available in your home on demand and you have got to look at what kind of price will be yielded by that, it is going to make the movie aspect of premium TV, which HBO has the lead of, more valuable from consumer — in terms of what consumers value they’re going to see what they’re getting in the HBO subscription just on the movie side, leave out the original program — as ever more valuable. That’s a good thing.”

Richard Plepler

Film viewing is 77% of viewing over linear networks

“Absolutely. I would just add that, because it is often obscured, that our film viewing across all platforms is over 72% of viewing, and on a linear network it is over 77% of viewing. So the truth of the matter is, the film business continues to be an enormous engine of viewership and subscriber satisfaction for HBO.”

Miscellaneous Earnings Call Notes 11.5.15

Colgate-Palmolive’s (CL) CEO Ian Cook on Q3 2015 Results

Have seen a decline in private label

“At the same time, we’ve seen a decline in private label shares in many of our categories indicating the consumers preference for branded products and respect of our equities.”


Anheuser-Busch InBev’s (BUD) CEO Carlos Brito on Q3 2015 Results

Big change in the Chinese economy towards consumption

“I think what’s happening in China at this point is that there is a big change from an economy that was all lead by exports and heavy investments in fixed assets, okay that generates a lot of blue-collar work or jobs to now an economy that’s much more service and domestic oriented economy. So more consumption, more consumer spending. So that of course, in the midst of this change, we see that in the Southeast, where some years ago there was lack of blue-collar workers and now there is too many of them. So there is a shift in there and I think that’s what the segments are showing us. But the segments that are more high priced are growing ahead of the ones that are lower price. And that’s exactly where we have most of our business and most of our brands position. So I think this change, while it may be bad for the industry, is not bad for us.”


PriceSmart’s (PSMT) CEO Jose Luis Laparte on Q4 2015 Results

We do have a soft economy in Columbia right now

“We do have a little bit of a soft economy right now, driven by the devaluation and other factors in the country. But we still are pretty optimistic about Columbia, and we haven’t reduced our efforts.”


Phillips 66’s (PSX) CEO Greg Garland on Q3 2015 Results

We see that the consumer side of China is doing very well

“we’re continuing to see good demand in Asia and across the system globally. So I think our view is demand is good. China is particular interest I think largely because of the reported numbers that what we see on both fuels and chemicals tells us that the consumer side of China is doing very well.””

By 2017/18 we’d expect not to be in a $50 crude environment any longer

“I mean our view consistently remains by 2017 and 2018 that really sort itself out and we are probably not $50 crude environment but we are probably not $100 but somewhere $60, $70, $80 in that range.”


Greenlight Capital Re’ (GLRE) CEO Bart Hedges on Q3 2015 Results

-16.9% through October

“The Greenlight Re investment portfolio lost 14.2% in the third quarter, bringing the year-to-date return to minus 16.9%.”

Brought next exposure up slightly during market sell off in August

“We reduced our gross exposure by 30 points in the quarter. Our net exposure increased slightly from 21% to 26% as we covered several shorts during the market sell-off in August. We continue to hold macro positions including gold, short Asian currencies and short French sovereign bonds. Overall, it’s been a challenging environment. We’re optimistic that we should get some recovery from our beaten down long portfolio.”


The Sherwin-Williams Company’s (SHW) CEO Chris Connor on Q3 2015 Results

Volume demand lagged initial expectations in virtually ever market we serve

“Volume demand lagged our initial expectations for the quarter in virtually every market we serve, but we remain focused on delivering positive results regardless of the demand environment.”

Continue to see deteriorating demand outside of NA

“We continue to see deteriorating demand for our product outside of North America.”


Banco Santander-Chile (BSAC) Q3 2015 Results

Economy has done better than most regional peers

“Segment [ph] in the corporate sectors continue to contract, but given the diversity of Chile’s economy and the fact that the average GDP growth of Chile’s main trading partners is relatively high, the economy has done better than other regional peers.”

No deterioration in asset quality

“In terms of evolution of asset quality, we think that the aligned trends are generally positive, especially in the consumer side, in the mortgage side and in the mid-size market. We haven’t seen any deterioration. ”


CBS (CBS) Leslie Moonves on Q3 2015 Results

Advertising is coming back in a big way

“advertising is coming back in a big way at CBS. Underlying network advertising was up 8% in the third quarter with strong growth in primetime, double-digit growth in sports and daytime and huge growth in late night, which was up 42%.’

The dire predictions of cord-cutting are overblown

“I think we’re all seeing that the dire predictions of cord-cutting are overblown, but the good news for CBS is, no matter where distribution goes, no matter how or where you want your content, we are in a perfect position. ”

There can never be too much content

“we are a content company, we believe the world can have more content, we don’t believe the guy who says oh, there’s too much content. There never can be too much content and we want more of it.”


Activision Blizzard (ATVI) Robert A. Kotick on Q3 2015 Results

Comparing King to Blizzard

“When we merged with Blizzard Entertainment, we found the right partner with extraordinary leadership. And when others dismissed the sustainability of Blizzard’s incredible capacity for innovation, we were certain patience would be rewarded. And it has. We see a lot of the same characteristics today in King. We think now is the right time to enter mobile gaming in a meaningful way. ”


Third Point Reinsurance’s (TPRE) CEO John Berger on Q3 2015 Results

Third Point owns Argentine debt

“Sovereign credit was up 3.1% on average exposure during the quarter, due to strength in Argentinean government debt the largest position in our credit portfolio. We’re looking forward to the run off Argentinean presidential election next month and we’ll be pleased with the victory from either candidate.’


Michael Kors Holdings (KORS) John D. Idol on Q2 2016 Results

Warm weather bad for seasonal items. Watch business still under pressure

“We saw accelerated growth in footwear, although the warm weather tempered boot sales in the quarter. The watch business continues to remain under pressure in retail and wholesale. ‘

Trend has been towards smaller handbags

” the idea that people are not buying handbags, I do not believe is a correct concept. They happen to be the fashion trend of smaller bags, so if we were selling x percent of $350, $400 and $500 handbags at this time last year we were selling less of those because we were selling a lot more in particular across bodies and large wallets. And that is what the consumer in particular the millennial is viewing as a fashion trend.’

All of us are now being impacted in parts of Texas because of oil prices

“all of us are now being impacted in parts of Texas because of oil prices there, that’s a little bit less tourist, but some of it’s related to the Mexicans shopping cross-border with the peso to the dollar.”


Time Warner (TWX) Jeff L. Bewkes on Q3 2015 Results

Programming is the most significant area of investment for the company

“Programming remains by far the most significant area of investment for the company. As you all know, we have plans to invest aggressively in content in 2016 and beyond.’


Stratasys (SSYS) David Reis on Q3 2015 Results

Excess capacity created by extraordinary expansion in 2014

“We also believe the situation has been worsened by the negative impact of excess capacity that followed the two-year period of extraordinary industry expansion that ended in 2014. Reflecting the low visibility of the current market environment, expected orders did not materialize as expected at the end of the quarter.’

Focused on adjusting the cost structure of the company to fit customer demand

“what I can tell is that we are taking very seriously the change in the business volume that we see in front of us and we are dealing with adjusting the cost structure of the company, the entire cost structure of the company not only MakerBot, to fit through what we see today in the market in terms of customer demand.”


Douglas Emmett’s (DEI) CEO Jordan Kaplan on Q3 2015 Results

Seems like occupancy is being driven by much stronger tenants

“I would say that, what’s driving — what’s going on here right now is a much stronger and wider base than what was driving the run up in ’04, ’05, ’06 and ’07. It’s way more comfortable, a way better percentage of kind of expenses for the tenants. The tenants are very — we’re seeing strong balance sheet and good credit. We’re seeing a good diversity of industries. You’re not seeing like a heavy lean on, I remember before, it was the mortgage — these mortgage guys were taking huge chunks of space”

“the strength in this market, all seems really healthy going to just literally more functional space for our tenants, as opposed to some of the tenants before that were literally just space grabbing and whether it be a big dotcom guy that didn’t exist a year ago and all of a sudden now needs 50,000 feet, 100,000 feet. What’s going on now seems a lot more comfortable and it’s backed by much stronger, more established tenants.”


Annaly Capital Management’s (NLY) CEO Kevin Keyes on Q3 2015 Results

Continued improvement in CRE fundamentals in the US

“The third quarter saw continued improved in U.S. commercial real estate fundamentals with healthy demand across all property types. Vacancy rates across all asset types declined compared to last quarter, with office and industrial continuing a trend of 22 consecutive quarters of positive demand.”

While the pace of CRE asset sales has slowed, we don’t see this as a weakening trend

“While the pace of sales has more recently begun to slow down 10% in September, we don’t see this as a weakening trend, as large take-private transactions continue to be announced with private equity taking advantage of the discount between listed markets and asset values.”

CMBS spreads have moved wider, but cap rates have not yet moved higher

“Spreads, however, have a continued widening that started this summer, with AAAs now at about 120 basis points, 32 basis points wider than at the beginning of the year and 34 basis points wider than this time last year. In addition, BBBs are almost 200 basis points wider than this time last year. While, this type of rate expansion is significant, we have not yet seen cap rates move higher. ”


Time Warner 2Q15 Earnings Call Notes

The pace of change in our industry is accelerating

“we recognize the pace of change in our industry is accelerating. And that means we’re going to have to move even faster to ensure we have the best content, provide the best possible consumer experience, and can monetize our viewership effectively across a wide variety of platforms and geographies, all while maintaining our focus on operational efficiency.”

You’ll see us investing aggressively to stay ahead of changes

“in the coming months and years, you’ll see us investing aggressively to stay ahead of the changes in our industry and capitalize on an environment where the biggest hits, networks, and brands are taking share.”

Issued Euro denominated debt

“Since our last call, we took advantage of favorable market conditions to strengthen our balance sheet by issuing $2.9 billion of long-term debt at attractive rates. That included our first euro-denominated debt offering, which will act as a natural hedge to the euro-denominated assets on our balance sheet.”

Investing a lot in content

“In the fourth quarter, I think we’re currently planning on doubling the number of original series episodes compared to a year ago. And they’ll be a lot more heavily weighted to the scripted side versus non-scripted, where it was a year ago too, so the average cost per episode will be higher. But we’re really excited about the programming cycle that we’re going to be beginning to enter, which should be over a prolonged period. So we think that that investment is very smart, it’s wise, and it’s going to be and will remain very much in control.”

Netflix leads to demand for content from other SVOD services

“everybody talks a lot about, for example, SVOD or Netflix internationally. That’s fine, that’s good, but what that does is it leads to increased demand from other SVOD services. It leads to increased demand from other incumbent networks all over the world, and those are pretty positive.”

There’s more original programming on HBO than any other SVOD by a wide margin

“I don’t think there’s a shortage of content on HBO right now. If you look at the amount of original series, original programming on HBO, there’s more than in any other SVOD service in the world by a wide margin. That’s before you say that there’s also a first-run movie supply on HBO’

Time Warner 4Q14 Earnings Call Notes

Each week I read dozens of transcripts from earnings calls and presentations as part of my investment process. Below are some of the most important quotes about the economy and industry trends from the transcripts that I read this week. Full notes can be found here.

18% EPS growth not bad

“2014 was another year of strong financial performance for our company with solid revenue growth and 18% growth in adjusted EPS. That’s our sixth straight year of at least high-teens adjusted EPS growth and it’s consistent with our plan to reach close to $6 in adjusted EPS in 2016 and over $8 in 2018.’

We’re in the midst of a secular shift

“Consumers’ appetite for high-quality video content is increasing globally, but we’re in the midst of a secular shift to on-demand consumption. At the same time, advertisers’ expectations for data analytics and targeting are also increasing.”

Investing a lot in content

“In 2014 we invested $14.5 billion in programming, production and marketing. That’s up about $3 billion compared to just five years earlier and we expect that to grow to around $19 billion a year over the next several years.”

Great content is becoming more and more valuable

“there is a lot of change occurring in our industry, but we’re more confident than ever in our position. That confidence stems from our belief that the very best video content is becoming more valuable to both consumers and to our advertising and distribution partners. We produce more of that great content than anybody which was evident once again in 2014.”

Returned 6b to shareholders last year

“In 2014 we repurchased $5.5 billion of our shares, a significant acceleration from the prior year. Combined with $1.1 billion in dividends, we returned $6.6 billion to shareholders during the year ”

Did see some sub declines last year

“We did see some sub declines last year in the basic cable universe and we have planned for modest declines to continue. And I think, as everyone knows, ad growth has been very muted, but we still see very strong consumer demand for multichannel TV and increasing viewing across all the platforms. And we think that TV and video remains the best platform for reaching a mass audience for advertisers.”

Time Warner 3Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Warner producing some content for oculus rift

‘At Warner’s, we recently created a new division, Blue Ribbon Content, to focus on short-form digital content. Its initial lineup consists of both original concepts and DC-based content, including an innovative virtual reality experience produced for the Samsung GALAXY Gear VR and Oculus Rift that will take you inside the bat cave. That’s exactly the type of innovative storytelling that will allow Warner Bros. to remain at the forefront of the industry as consumer viewing habits continue to evolve.”

Not so happy with Charlie Ergen’s comments on the Dish call yesterday

“iven Charlie Ergen’s comments on the earnings call yesterday, I just want to provide a little bit of context from our perspective. And it think it’s fair to say that we disagree with virtually everything he said as it related to the importance of our product, as it related to his platform. We were both disappointed in the very antagonistic and aggressive nature of his comments yesterday, and we’re disappointed particularly given the fact that DISH had previously agreed to our network’s rates and our carriage proposals weeks ago. ‘

Syndication rates still strong internationally

“I think that what we’re continuing to see is on a global basis, demand for our product and the pricing for our product continues to go up. And as John said, the programming that — the hit programming that continues to kind of dominate the airwaves today is the programming that you’re seeing the most pricing power on. And so — but international markets are very strong right now, and we continue to — we expect to continue to see that in the foreseeable future.”

Ratings aren’t everything

“Ratings are one measurement, but there is not a particularly strong correlation between ratings and affiliate fees because what’s more important than ratings is the brand affinity and the passion engagement that subscribers have with particular branded environments and networks. And so you can have a network that has lower ratings, but has a subset of fans, like Turner Classic Movies, for example, that are incredibly passionate about a particular network. Those networks can command a premium and affiliate fees because the distributors value that relationship with the consumer.’

Push to own more original content at Turner and Warner

“our goal and expectation at TNT and TBS is we’re going to own more of our originals. And when I say own more, that’s Turner and Warner’s, and Warner’s being our most important studio partners. So we are going to make whatever the right decisions are to increase the probability of success for the shows that we air on our network.”