Turner Takes $104-Million Hit for 'Without a Trace'
Time Warner confirmed Feb. 3 that a $104 million programming
write-down that appeared as part of its Turner unit earnings was related to the
CBS series Without A Trace.
Turner's drama network TNT had bought the rights to the show
from sibling Warner Bros. TV back in 2003 for $1.35 million, but wasn't able to
capitalize on the crime drama to the extent expected. TNT began showing the
procedural in 2004. The write-down appeared as part of Time Warner's fourth
quarter and full year earnings. (See related: "Time Warner Earnings Buoyed by Subscription Revenues")
Time Warner ultimately took a $77 million charge on the
show, as a result of financial consolidation. Experts suggest that Warner Bros.
may have been counting on the back-end revenue that never materialized and that
Turner's inability to turn it into a revenue-generator turned it into a double-whammy
for the parent company. Time Warner's earnings statement said that Warner Bros
is "attempting to re-license [the show] to a third party."
Warner Bros. is the No. 1 supplier of TV shows to the
networks and has been for 18 of the past 23 years.
Separately, Time Warner Chairman and CEO Jeff Bewkes said on
the earnings call that he saw lots of opportunities for Warner Bros.: "We see
encouraging secular dynamics this year and over the next several years, with
recent signs that broadcasters may be able to secure our cash carriage fees and
NBC's recent decision to resume broadcasting scripted programming at 10pm and
the robust marketplace for both original and off network programming on cable."
Bewkes said the company was committed to increasing original
production and programming investment in its cable networks, but acknowledged
that some programming bets didn't always pay off.
"We're not totally hitting it, and you need to move the line
up a little, which we are doing," he said, referring to the host of star
vehicles TNT and TBS rolled out for the upfront in May 2009. Some shows "didn't
work as well as we thought," he added. "It will take a little longer to rotate
out, but I don't think it's a close structural problem."
Time Warner CFO John Martin predicted that ad revenue from
entertainment networks would be up in the first quarter. The networks group,
which includes CNN beyond the entertainment networks, were 4% down in fourth-quarter
ad revenue. CNN accounted for about 2% of that dip on tough political
comparisons with the period in 2008.
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