EARNINGS PREVIEW: US Media Cos May See Ad Recovery Continue

TAKING THE PULSE: Diversified media companies are expected to post quarterly results close to year-earlier figures, although the advertising market continues to improve from a sharp downturn during the recession. Prices in the broadcast television ad market were reported to be up 30% in September, at the start of the fall season, from two months earlier, as political-ad demand has been strong. Ad-revenue growth is likely to be especially stout at cable-television networks. Even the number of ad pages in long-struggling U.S. magazines inched up in the third quarter, the second growth period in a row.

Meanwhile, through Oct. 24, 2010 box-office revenue was up 3.4%, to $8.65 billion, on higher ticket prices, including 3-D surcharges, although attendance slipped 2.2%, to 1.1 billion, according to Hollywood.com. Two studio chiefs recently reported the DVD sales market is stabilizing after a sharp downturn in 2009.

 
    COMPANIES TO WATCH: 
 
    Time Warner Inc. (TWX) - reports Nov. 3

Wall Street Expectations: Analysts surveyed by Thomson Reuters anticipate the media conglomerate to report earnings of 53 cents a share on revenue of $6.41 billion, compared with 55 cents and $6.55 billion, respectively, a year earlier. The 2009 results include AOL Inc. (AOL), since spun off.

Key Issues: Time Warner saw first-half strength in its film business and networks segment, which includes Turner Broadcasting and HBO. But its struggling news network CNN has replaced its leader and is shuffling the prime-time lineup to try and stem viewership loss. Chief Executive Jeff Bewkes has said Time Warner may look for acquisitions in emerging markets.

 
    News Corp. (NWSA) - reports Nov. 3

Wall Street Expectations: The owner of Dow Jones & Co., publisher of this newswire, is seen posting fiscal first-quarter earnings of 24 cents on revenue of $7.42 billion, compared with 22 cents and $7.2 billion, respectively.

Key Issues: News Corp. has predicted adjusted profit growth for the current year, likely led by its cable outlets, which have been boosted by the popularity of Fox News. Meanwhile, the company is in a heated fight over payments to television stations it owns from Cablevision Systems Corp. (CVC) that has impacted its New York and Philadelphia outlets for a week and a half.

 
    CBS Corp. (CBS, CBSA) - reports Nov. 4

Wall Street Expectations: The broadcaster and outdoor-ad company is projected to earn 31 cents on revenue of $3.37 billion in its third quarter, compared with year-earlier earnings of 30 cents and revenue of $3.35 billion.

Key Issues: CBS, which relies on advertising for nearly two-thirds of its revenue, may see little improvement because of fewer ads going to national and local broadcasts and syndicated TV. The company, which continues to cut costs and pay down debt, also is negotiating for higher fees from cable and satellite providers that retransmit its channels.

 
    Viacom Inc. (VIA, VIAB) - reports Nov. 11

Wall Street Expectations: Analysts forecast earnings of 69 cents on revenue of $3.29 billion, while a year earlier, the owner of such cable TV channels as MTV and Comedy Central reported a profit of 76 cents on revenue of $3.32 billion.

Key Issues: Viacom is expected to benefit from ad-revenue growth at cable channels, which account for most of its profit. Audience ratings also are growing, especially at MTV, which has a hit show in "Jersey Shore." Some analysts have said deals with cheap rental providers could cannibalize long-term results at Paramount Pictures, distributor of "Iron Man 2."

 
    Walt Disney Co. (DIS) - reports Nov. 11

Wall Street Expectations: The company is seen posting fiscal fourth-quarter earnings of 46 cents a share on revenue of $9.94 billion, compared with 47 cents and $9.87 billion, respectively.

Key Issues: The largest U.S. media company by market value is expected to benefit from strong international box-office and consumer-products sales for "Toy Story 3." The prior-year quarter included an extra week, which could hurt theme-park comparisons. Strong growth is likely to continue at the ESPN cable network, which is expanding internationally.

(The Thomson Reuters estimate and year-earlier figures may not be comparable due to one-time items and other adjustments.)

-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357; Kathy.Shwiff@dowjones.com

(Nat Worden contributed to this article.)

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