Media giants Time Warner, Viacom and Fox News Corp announced their Q3 earnings this week. If we look at these as a collective weather report, I would say the hurricane has definitely moved off shore and is giving way to partly sunny skies, with scattered showers in some regions. Compared to the abysmal Q2 earnings, resulting from a down economy and significant reductions in advertising spending, the Q3 numbers look encouraging, especially from the cable and theatrical divisions. However, DVD sales continue to suffer across the board with more people getting their movies online and increased competition from services like Netflix. Newspapers and network television continue to face many obstacles, mainly decreased ad spending…
Fox News Corp
- Theatrical divisions are holding strong with summer box office hits like Ice Age: Dawn of the Dinosaurs, helping to contribute to a very healthy 11 percent increase in net income.
- The cable networks experienced a 41 percent increase in operating income led by Fox News Channel who saw their own operating income soar by 79 percent and continued to blow the doors off the competition with viewership 125 percent higher in the third quarter compared to its nearest competitor.
- Overall however, revenue was off by 4 percent – weighed down by slumping revenues from its broadcast division (down 7.7 percent), and newspapers and information properties, including the Wall Street Journal and the New York Post, (down 17.7 percent).
- Reported a five percent decline in revenues compared to Q3 2008, brought down by low revenues at AOL, and its publishing and film entertainment divisions.
- Slowing DVD sales contributed to a 12 percent decline in content revenues.
- However……what a shocker….despite falling ad revenues they had five percent growth in their cable networks divisions lead by HBO and Turner Broadcasting.
- Profits were up 15 percent, but overall revenue dropped 3 percent – still better than expected according to Barrington Research analyst James C. Goss. “They beat my expectations on the bottom line. Revenues were better, but cost containment strategies really helped.” (Daily Finance, 11.3.09)
- MTV saw their ratings rise while Paramount, its movie studio, saw worldwide theatrical revenue increase 16 percent over last year. This was due in part to fewer films and focusing more on the blockbuster. Star Trek, Transformers, and GI Joe all did well at the box office.
- DVD sales were also down, pulling worldwide home entertainment revenue down 21 percent. But moviegoers helped to lessen the impact. (See my earlier blog post.)
None of this comes as a surprise to me, nor should it to any of our loyal BurrellesLuce Fresh Ideas readers. As stated in my previous posts, cable and theatre continue to be bright spots while newspapers and DVD sales continue to face challenges. It appears to me that content continues to be there for the media companies; monetizing it in a profitable way, in this ever changing world of technology and in an economy that is just starting to show signs of recovery, is the real challenge.
As the old Buddhist saying goes, “You never step into the same river twice.” The media giants seem to have come to this conclusion, but are looking for far less turbulent rapids in Q4 and 2010.