English Entertainment
Warner’s revenues for the year rise marginally
MUMBAI: US media conglomerate Time Warner has announced that its revenues rose four per cent over 2005 to $44.2 billion, reflecting increases at the company’s cable and networks segments.
Time Warner chairman and CEO Dick Parsons said, “I am delighted that 2006 proved to be a good year for Time Warner. Taken together, our businesses performed well, and we achieved all of our announced financial objectives. We successfully executed on our strategy – enabling us to lead our industry and lay the foundation for creating significant new value. At the same time, we returned billions of dollars directly to our shareholders through dividends and stock repurchases.
“We expect 2007 to be another superb year for Time Warner. Our businesses are well positioned to generate strong operating and financial performances. On the strategic front, we aim to create substantial incremental value by completing the integration of our recently acquired cable systems, further developing AOL’s online advertising business, and driving digital initiatives across the entire company.
“In addition, we will continue to allocate our capital effectively, including the expected completion of our current $20 billion stock repurchase programme during the first half of 2007.”
Fourth-quarter revenues climbed by eight per cent over the same period in 2005 to $12.5 billion, driven by increases at the cable and networks segments. In its networks division which comprises of Turner Broadcasting and HBO revenues for the year rose by seven per cent ($703 million) to $10.3 billion, benefiting from growth in subscription, ad and content revenues, including the consolidation of Court TV ($253 million) from January 1, 2006.
Subscription revenues climbed nine per cent ($498 million), due to higher rates and, to a lesser extent, increased subscribers at Turner and HBO, as well as the consolidation of Court TV ($84 million). Included in the prior year results was a $22 million benefit from the resolution of certain contractual agreements at Turner. Ad revenues were up four per cent ($111 million), led by a 13 per cent increase at Turner, including Court TV ($164 million), offset primarily by the cessation of The WB Network’s operations in September 2006.
Content revenues increased seven per cent ($70 million), due mainly to higher sales of HBO’s original programming, including the domestic cable sale of The Sopranos, offset partially by lower syndication sales of Sex and the City and the prior year licensing revenues from Everybody Loves Raymond, which ended its broadcast run in 2005.
At AOL revenues for the year declined by five per cent ($417 million) to $7.9 billion, due to a 14 per cent decrease ($971 million) in Subscription revenues, offset in part by a 41 per cent increase ($548 million) in ad revenues.
The lower subscription revenues resulted mainly from a decline in domestic AOL brand subscribers, which related partially to AOL’s strategy, implemented in August 2006, of offering its e-mail, certain software and other products free of charge to Internet users. Ad revenues reflected strong growth in display advertising, advertising run on third-party Web sites generated by Advertising.com and paid-search advertising.
In the film segment revenues decreased by 11 per cent ($1.3 billion) to $10.6 billion, due to difficult comparisons to the prior year record performance at Warner Bros. In 2005, Warner Bros. finished number one in worldwide theatrical box office, driven by the success of Harry Potter and the Goblet of Fire, Charlie and the Chocolate Factory and Batman Begins.
In addition, a strong theatrical slate contributed to a record performance at Warner Home Video during 2005. These difficult comparisons and the lower performance of the theatrical slate in 2006 led to a decline at Warner Home Video in 2006.
English Entertainment
Warner Bros. Discovery shareholders approve Paramount deal
Investors wave through a $111 billion megamerger but deliver a stinging, if toothless, rebuke over half-a-billion-dollar goodbye packages
NEW YORK: The shareholders said yes to the deal. They said no to the cheque. At a virtual special meeting on Thursday that lasted barely ten minutes, Warner Bros. Discovery investors voted overwhelmingly to approve Paramount Skydance’s $111 billion acquisition of the company — and then turned around and voted against the lavish exit pay packages lined up for chief executive David Zaslav and his fellow outgoing executives.
Not that it will make much difference. The compensation vote is purely advisory and non-binding. The Warner Bros. Discovery board can, and almost certainly will, pay out as planned.
But the symbolism stings. It is the second consecutive year that WBD shareholders have voted against the executive compensation packages, and this time they had good reason. Zaslav’s exit deal is, by any measure, extraordinary. Under the terms filed with the Securities and Exchange Commission, he is set to receive $34.2 million in cash severance, $517.2 million in equity in the combined company, and $44,195 in continued health coverage — a total of at least $550 million. On top of that, Warner Bros. Discovery has agreed to reimburse Zaslav up to $335 million for taxes assessed by the Internal Revenue Service on his accelerated stock vesting, though the company says that figure will decline depending on when the deal closes. As of March 11, Zaslav also held $115.85 million in vested WBD stock awards — and last month sold a further $114 million worth of WBD shares.
Shareholder advisory firm ISS recommended voting against the compensation measure, citing “problematic” tax reimbursements to Zaslav and the full vesting of his stock awards.
Zaslav will be bound by a two-year non-competition covenant and a two-year non-solicitation of customers and employees after the deal closes.
His lieutenants are not walking away empty-handed either. J.B. Perrette, chief executive and president of global streaming and games, is in line for $142 million, comprising $18.2 million in cash severance and $123.9 million in equity. Bruce Campbell, chief revenue and strategy officer, will receive an estimated $121.5 million, including $18.8 million in severance and $102.7 million in equity. Chief financial officer Gunnar Wiedenfels is set for $120 million, made up of $6.6 million in cash severance and $113.1 million in equity. Gerhard Zeiler, president of international, will get $82.6 million, including $11.9 million in severance and $70.7 million in equity.
The deal itself, clinched in February after Netflix declined to raise its bid for Warner Bros., still needs regulatory clearance from the Justice Department and European authorities. Several state attorneys general are also weighing legal action to block it.
Senator Elizabeth Warren, Democrat of Massachusetts, was unsparing. “The Paramount-Warner Bros. merger isn’t a done deal,” she said after the shareholder vote. “State attorneys general across the country are stepping up to stop this antitrust disaster. We need to keep up this fight.”
If it does go through, the combined entity would be a formidable beast, bringing together Paramount Skydance’s stable — CBS, CBS News, Paramount Pictures, Paramount+, BET, MTV and Nickelodeon — with WBD’s portfolio of HBO, Max, Warner Bros. film and TV studios, DC, CNN, TBS, TNT, HGTV and Discovery+. Paramount has said it expects $6 billion in cost savings from the merger, which is Wall Street shorthand for mass layoffs on a significant scale.
The ten-minute meeting was presided over by chairman Samuel Di Piazza Jr., with Zaslav, Campbell, Wiedenfels and chief communications officer Robert Gibbs in virtual attendance. Di Piazza was bullish. “We appreciate the support and confidence our stockholders have placed in us to unlock the full value of our world-class entertainment portfolio,” he said. “With Paramount, we look forward to creating an exceptional combined company that will expand consumer choice and benefit the global creative talent community.”
Zaslav echoed the sentiment. “Over the past four years, our teams have transformed Warner Bros. Discovery and returned the company to industry leadership,” he said. “Today’s stockholder approval is another key milestone toward completing this historic transaction that will deliver exceptional value to our stockholders.”
Paramount Skydance struck a similar note. “Shareholder approval marks another important milestone towards completing our acquisition of Warner Bros. Discovery,” it said in a statement, adding that it looked forward to “closing the transaction in the coming months.”
The shareholders have spoken on the merger. On the pay, they were ignored before the vote was even counted.
