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Media Companies ‘Resilient’ in Turbulent Economy

17 Sep, 2008 By: Erik Gruenwedel

Parent companies to movie studios, TV networks and cable operations projected confidence despite a shaky week for the U.S. economy.

The federal government’s $85 billion bailout of insurance giant AIG, the bankruptcy of 158-year-old Lehman Bros., and Bank of America’s acquisition of financially troubled Merrill Lynch & Co. were not ignored by executives from Comcast, Time Warner and CBS attending an investor conference in New York.

Comcast CFO Michael Angelakis said the nation’s largest cable operator was not immune to the week’s events but well positioned to “take body blows.”

“It's more than a scary world out there and we're trying to manage, though the marketplace looks somber," Angelakis said.

He said the Philadelphia-based company continues to examine multiple-channel distribution, including online, linear and video-on-demand. The CFO said with subscribers watching about 300 million videos a month, Comcast would continue examining acquiring content distributors, including sports.

He said the company remained bullish on high-definition, but admitted increasing HD channels was more of a marketing ploy than value add.

“I don't think people care about watching CSPAN in HD,” he said.

Jeff Bewkes, president and CEO of Time Warner said that while the economy had emerged as the media company’s biggest strategic question, it hadn’t had much effect on earnings, revenue and growth.

The executive said Time Warner, which owns Warner Home Video, generated 40% and 30% of revenue from content sales and subscription sales, respectively.

Bewkes said the two segments have not been sensitive to economic slowdowns. In fact, he said they act countercyclical at times due to being perceived as a value during tough times.

He said up front TV ad sales conducted last month were up 15% from a year ago.

“That’s good for Time Warner,” Bewkes said.

Les Moonves, president and CEO of CBS Corp., sidestepped the turmoil a few blocks away on Wall Street, and lavished praise on TV DVD, consumer demand for high-definition and online digital video recording pioneer TiVo, the latter he said posting 30% market penetration.

The executive said sales of TV programs on DVD continued to be strong and surpass movies. However, he remained cautious regarding whether movie DVD cannibalization would be a factor in the surge by cable operators to release select studio movies on VOD the same day as DVD.

“We’re not there yet,” Moonves said. “In the meantime, we’re still seeing double digit growth for our DVD sales.”

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