Talk about a company that has had to battle an image problem this summer on Main Street!
Before reaching a settlement with CBS over the price to show the network’s programs on the cable network, Time Warner Inc (NYSE:TWX) infuriated television watchers across the United States because of its association with Time Warner Cable Inc (NYSE:TWC). For weeks, CBS and Time Warner Cable Inc (NYSE:TWC) were locked in a high-stakes game of “chicken,” as neither side seemed willing to budge.
Time Warner alleged that CBS is charging exorbitant prices for its programs to be shown on Time Warner Cable Inc (NYSE:TWC). Viewers from coast to coast were not able to see their favorite CBS programs on the cable network – no David Letterman, no Monday-night lineup of hit comedies, no U.S. Open tennis matches, no preseason NFL football games.
The problem, which affected New York, Los Angeles, and other cities, grew so serious that the Los Angeles City Council felt a need to get involved. On Aug. 30, the Los Angeles Times reported that a committee of the city council sent a motion to its members petitioning them to review the subject at the next meeting on Tuesday. They want the Federal Communications Commission to resolve the thorny Time Warner Cable Inc (NYSE:TWC)-CBS affair.
Predictably, the two sides reached an agreement on the eve of the 2013 NFL season.
It was just in time, too. And if you had gone on social media websites and read people’s bitter comments, you can see that people were angry at Time Warner, for its cable operation’s actions. If you judged only by what you read on Facebook and Twitter, you’d have little hope for Time Warner’s prospects. But stock market analysts know to ignore the hype and focus on the more essential factors when judging this media behemoth.
Time Warner pleased analysts in the second quarter, as its revenue of $7.4 billion topped estimates (the consensus was roughly $7.1 billion), and earnings per share were also encouraging to Wall Street.
Time Warner, like a winning sports team, showed that it had a deep bench of assets. The robust three-month period was powered by strong performances in motion pictures and cable-television advertising.
Wall Street also supported Chief Executive Jeff Bewkes’ decision to spin off the company’s perennially poorly producing publishing group. Time’s magazine division had failed to show significant growth prospects for many years. This entity had not fit in with Bewkes’ vision of powerful performing units across the board at Time Warner.