Sluggish Entertainment and Publishing Results Hurt Time Warner Earnings

By AMY CHOZICK

A slow three months at the box office for Warner Brothers movies and continued sluggishness at Time Inc. magazines contributed to a 32.6 percent decline in net income at Time Warner.

The giant media conglomerate said on Wednesday that its net income for the three months that ended June 30 was $429 million, or 44 cents a share, compared with $637 million, or 59 cents a share, in the same period a year earlier. Revenue decreased by 4 percent to $6.7 billion and adjusted operating income fell 5 percent to $1.2 billion.

Revenues at the company's Warner Brothers film and television studio fell 8 percent to $2.6 billion, resulting largely from comparisons to a strong quarter in 2011. Last year, the studio released the hit film “The Hangover Part II” as well as the DVD of “Harry Potter and the Deathly Hallows: Part I.”

The company said it expects significant improvement at the studio this quarter because of the s uccess of “The Dark Knight Rises,” which has grossed more than $535 million worldwide since its July 20 release. The studio's stripper-with-a-heart-of-gold movie “Magic Mike” has taken in more than $100 million at the domestic box office since its release in June.

Revenues increased by 4 percent, to $3.6 billion, at the company's network business, which includes Turner Broadcasting's TNT, TBS and CNN and the pay cable channel HBO. Higher subscription and advertising revenues helped offset a 5 percent decline in content revenues. HBO had a particularly strong quarter in ratings and critical acclaim with shows like “Game of Thrones,” “True Blood” and “Girls.”

Ratings softness at CNN, while a small part of Time Warner's business, has continued to drag on the company's cable TV division. Last Friday, Jim Walton, the president of CNN Worldwide, said he would step down at the end of the year.

Jeffrey L. Bewkes, ch ief executive of Time Warner, reinforced his commitment to CNN but said he is not satisfied with the low ratings. “We think there's a very strong demand for objective, comprehensive, non-partisan coverage,” Mr. Bewkes said on a conference call with analysts. “But we need to do it in a very compelling, more engaging way than we've been doing of late.”

Time Inc., the publisher of 21 magazines including Time, People and Sports Illustrated, saw a 7 percent, or $36 million, decrease in advertising revenue and a decrease of 9 percent, or $88 million, in overall revenue. Operating income at Time Inc. fell 43 percent to $97 million.

Mr. Bewkes said the company thinks of Time Inc. not as a traditional publishing unit, but as a branded entertainment company with potential to grow on digital platforms.

“It's way too reductive to just think ‘publishing' has a constrained future,” he said. He added that he sees brands like People, InStyle and Real Simple â €œbecoming very vibrant on tablets.”

US Poised To Spend More On Mobile Advertising Than Japan

By TANZINA VEGA

The United States is poised to become the global leader in spending on mobile marketing this year according to new research, passing Japan, which had been the world's largest market for mobile ads.

On Tuesday, the company eMarketer released its first projections for ad spending on mobile marketing and found that the total market for advertising in the globally will reach $6.43 billion this year. Advertisers are expected to spend $2.4 billion on mobile advertising in the United States in 2012, up from $1.23 billion in 2011.
eMarketer estimates spending on mobile ads in Japan to reach $1.36 billion in 2012.

Spending on mobile ads in Western Europe is expected to reach $1.3 billion. Easter Europe, Latin America and the Middle East and Africa lag behind substantially, at $121 million, $47 million and $3.1 million respectively.

The data includes spending on advertising in mobile applications, mobile Web and search , display ads, games and tablets. Data from text message advertising was not included.

Much of the growth in the market can be attributed to the rapid adoption of smartphones and mobile Internet usage, said Clark Fredricksen, vice president of communications and eMarketer. “Marketers in the U.S. are much more comfortable now than ever before with incorporating mobile into their marketing mix.” Mr. Fredricksen said.

The market is expected to grow as more marketers take advantage of the location- based technologies in many smartphones, he added. “Things will get a lot more interesting and you'll probably see a lot more dollars headed to mobile.”

One such technology is geofencing where marketers send messages to consumer's mobile devices when they enter a specific geographic area, like a mall, a shop or even an event like a concert. Companies like Hewlett-Packard, Kmart, JetBlue and S. C. Johnson have already begun experim enting with geofencing.

Despite the massive gains in the mobile marketplace, spending will still only represent one percent of total ad spending worldwide, Mr. Fredricksen said. “It's going to be a really long time before mobile challenges other mainstay global ad channels.”

Credit Cards With the Best Extended Warranties

By ANN CARRNS

One of the benefits of shopping with a credit card is that many cards offer free, extended-warranty protection for purchases that come with an existing manufacturer's warranty. But a new survey from the card comparison site CardHub.com finds that there are significant differences in the perk, depending on which network sponsors the card.

All four card networks - MasterCard, Visa, American Express and Discover - offer programs that extend existing manufacturer's warranties on at least some of their cards, generally for up to 12 months and for amounts up to $10,000. (Rules for warranty extensions are set by the card networks, rather than the issuing banks, said Odysseas Papadimitriou, chief executive of CardHub.)

But only American Express and Discover offer extended warranties to all cardholders, the study found. Those networks ranked first and second, respectively, in CardHub's overall rankings for that reason.

The survey ranked cards on a 100-point scale, with a maximum of 55 points awarded for “likelihood of coverage,” which includes the general availability of the extended warranty benefit within the network, and the range of eligible purchases; 35 points maximum for the “scope of warranty,” meaning the length of the extension and the coverage limit; and 10 points maximum for the claims process.

American Express was the best overall for extended warranty coverage, Mr. Papadimitriou said. It is the only card that extends the manufacturer's warranty on refurbished items, like computers, which are becoming increasingly popular.

Plus, American Express offers 12 months of extended coverage for items with an original, manufacturer's warranty of up to five years. That means you get six years of coverage.

The other cards are less generous. MasterCard ranked last because, while it also extends coverage for 12 months, the perk only applies to purchases with an original warranty of 12 months or less. (Its corporate cards cover existing warranties up to five years.)
MasterCard also has a particularly lengthy list of exclusions that may make coverage doubtful, Mr. Papadimitriou said, like “mechanical failures caused by normal wear and tear.”

In general, cardholders don't have to sign up ahead of time to receive the warranty protection. But they do have to provide documentation of the purchase, including receipts, credit card statements and copies of the original manufacturer's warranty. So it makes sense to save those items for future use when making major purchases that may be covered.

Have you ever filed a claim for an extended warranty provided by your credit card? What was your experience?

Howard Koch, Longtime Producer, Named Academy President

By MICHAEL CIEPLY

LOS ANGELES - Howard W. Koch Jr., known widely as “Hawk,” was named president of the Academy of Motion Picture Arts and Sciences at a Tuesday night meeting of its board of governors. He succeeds Tom Sherak, who stepped down on reaching a term limit after three years as president of the Academy, which presents the Oscars and oversees programs that promote film education and awareness.

Mr. Koch, a film producer of long experience, had been widely viewed as a likely successor to Mr. Sherak. He had served recently as the group's first vice president, and is entering his ninth year on the board of governors. Because the president must be a governor and governors only serve for nine years, Mr. Koch will be limited to one year as president. People briefed on his plans describe him as favoring a push to compress some Oscar-related activities into a brief period before the Academy Awards, perhaps creating a festival-type atmosp here that would bring new energy to the annual prize ceremony.

Mr. Koch's father, Howard W. Koch Sr., who is deceased, also served as the Academy's president.

The Academy's governors on Tuesday also named Cheryl Boone Isaacs, Kathleen Kennedy and Phil Robinson to vice president positions, while Rob Friedman was elected treasurer and Robert Rehme was elected secretary. The Academy includes about 6,000 professional workers from various branches of the film industry.

The Breakfast Meeting: Special Olympic Anger Edition

By THE EDITORS

NBC and Twitter have relented and rescinded the order to suspend the account of Guy Adams, the journalist for The Independent who criticized the network's Olympic coverage and broadcast the e-mail address of NBC's Olympic chief. (“Did I miss much while I was away?” he immediately tweeted.) Twitter also admitted that an executive there had alerted NBC, Twitter's business partner in games coverage. Both companies experienced a backlash on â€" where else? â€" Twitter.

The network is looking into ways to avoid giving away the results of the competition before the events are shown on television, as it did with an on-air promo that told viewers about Missy Franklin's gold in the 100-meter backstroke. In an interview with Sports Business Daily, the chairman of NBC Sports, Mark Lazarus, defended the network's decision to show marquee events on tape delay on television. “This is a business,” he said.

Comcast reported incr eased earnings of 32 percent, largely on new broadband consumers and a drop in the number of customers giving up cable. But NBC Universal remains a trouble spot for the company, the largest cable provider in the country.

The Daily, News Corporation's experimental tablet magazine, is laying off about a third of its 170 member staff. The Daily is the third highest-grossing app and is known to be a particular favorite of Rupert Murdoch, but it's had trouble attracting ad dollars. The editor, Jesse Angelo, announced that the magazine would no longer produce a separate opinion section and that its original sports content would be largely replaced by features from Fox Sports.

Gore Vidal, the novelist, memoirist, Hollywood screenwriter, political candidate, man of letters, acerbic wit and sparring partner of Norman Mailer, William F. Buckley and many, many others, has died at the age of 86. In The New York Times's obituary, Charles McGrath writes that “Mr. Vidal was, at the end of his life, an Augustan figure who believed himself to be the last of a breed, and he was probably right.”

Wednesday Reading: A YouTube Introduction to College

By TARA SIEGEL BERNARD

A variety of consumer-focused articles appears daily in The New York Times and on our blogs. Each weekday morning, we gather them together here so you can quickly scan the news that could hit you in your wallet.

New Broadband Customers Help Comcast Earnings

By AMY CHOZICK

Comcast added 156,000 high-speed Internet customers in the three months that ended June 30, helping to bolster its net income by 32 percent and underscoring the company's continuing transition from cable giant to broadband provider.

On Wednesday, the company, the nation's largest cable operator, said it lost 176,000 cable customers. That's a 26 percent improvement from the 238,000 cable customers it lost in the same quarter in 2011.

That's the seventh consecutive quarter that Comcast has reduced its rate of losses on the cable side, driven mostly by new apps and 38,000 video-on-demand offerings that encourage customers to pay the monthly bill. The average monthly bill Comcast customers paid increased by 8 percent in the quarter to $148.57.

The most significant growth came from $2.38 billion in revenue from high-speed Internet subscribers, an 8.8 percent improvement from 2011. Revenue jumped 34 percent at the compan y's services business, a growing division that includes Internet, voice and other services for mostly small businesses.

Comcast had $15.2 billion in revenue and $3.08 billion in operating income, representing a 6 percent increase in revenue and a 4.8 percent improvement in operating income from the same quarter last year. Net income was $1.35 billion. The company, based in Philadelphia, had free cash flow of $1.55 billion, representing a 2.2 percent increase.

One continued weak spot was NBCUniversal. Last year Comcast received government approval of its $13.8 billion bid to acquire a majority stake stake in the television, movies and theme park business.

In the April-to-June quarter revenue, NBCUniversal fell slightly to $5.5 billion. Operating cash flow fell 15 percent, to $982 million.

Comcast said part of the weakness at had to do with a Netflix deal the media company struck in the same quarter of 2011. That infusion o f cash made the most recent quarter look weak by comparison.

But NBCUniversal wasn't without its own mishaps. The $220 million Peter Berg science fiction movie “Battleship” did poorly at the box office contributing to a 1.8 percent decrease in revenue at the company's filmed entertainment unit.

The NBC broadcast network showed signs of improvement with $1.54 billion in revenue, a 9 percent increase. Advertising revenue at NBC was virtually flat, while advertising revenue for cable channels like USA, CNBC and MSNBC improved by 4 percent.

Comcast repurchased 26 million shares or $750 million worth of stock in the quarter, a 43 percent increase from 2011.

Twitter Gets a Backlash of Its Own Over Adams Suspension

By CHRISTINE HAUGHNEY

Twitter has become the default for people when they have a complaint. Even when that complaint is about Twitter.

The company found itself at the center of a Twitter firestorm when it suspended on Sunday the account of Guy Adams, a British newspaper reporter for The Independent, after he had posted complaints about NBC's tape-delayed Olympics coverage. The posts included the e-mail address of Gary Zenkel, the head of NBC Sports.

On Tuesday, both Twitter and NBC backpedaled. While Twitter officials stress that the company generally does not monitor content, Alex Macgillivray, Twitter's general counsel, admitted in a statement on Tuesday that Twitter “did proactively identify a Tweet that was in violation of the Twitter rules and encouraged them” - NBC - “to file a support ticket with our Trust and Safety team to report the violation.”

Chloe Sladden, vice president for media at Twitter, personally apolo gized on her Twitter feed for the mistake. NBC also issued a statement apologizing for having the reporter's account suspended. Twitter then reactivated the reporter's account.

“Our interest was in protecting our executive, not suspending the user from Twitter,” an NBC spokesman said in a statement. “We didn't initially understand the repercussions of our complaint, but now that we do, we have rescinded it.”

But the initial suspension already put both companies out of favor with many Twitter faithful. Out of solidarity for Mr. Adams, supporters also started posting the e-mail address of Mr. Zenkel, the NBC executive. They paired the hashtags #guyadams with #NBCfail. They called the incident a “watershed moment” for social media and accused Twitter executives of censoring Mr. Adams's account “to cater to corporate whim.”

They also went for the jugular by threatening not to tune in to NBC's Olympics coverage. Mr. Adams gained several thousand new followers after Twitter reinstated his account.

“Thanks to @NBCOlympics behavior wrt @GuyAdams I won't be watching any more Olympics. Sorry, London.” wrote one follower.

Twitter has always enjoyed an extraordinary amount of good will from its users in part because it does not require them to sign in under their own names (unlike Facebook) and it allows almost unlimited free speech. The suspension of Mr. Adams's account seemed like an exception to Twitter rules based on a corporate relationship.

Last month, Twitter and NBC announced a partnership to share their Olympics coverage across both of their platforms. NBC would promote Twitter's Olympic event page through on-air graphics and Twitter would include NBC commentators on its Olympic events page.

The problems started on Friday evening when Mr. Adams, who is based in Los Angeles, started posting on Twitter how frustrated he was that NBC was delaying television c overage until prime time. He wrote, “Am I alone in wondering why NBColympics think its acceptable to pretend this road race is being broadcast live?” As his frustration grew, he filed a post to Twitter that was heard throughout social media.

“The man responsible for NBC pretending the Olympics haven't started yet is Gary Zenkel. Tell him what u think!” He ended his post with the work e-mail address of Mr. Zenkel. Soon he was retweeted and some angry followers added the hashtag #NBCFAIL.

That's when Twitter officials abandoned their usual stance and contacted NBC employees they knew through their Olympics partnership. They told them about the post and advised them on how to suspend Mr. Adams's account. Writing in The Independent, Mr. Adams said he discovered that his account had been suspended “for posting an individual's private information such as private e-mail address.” But he stressed, “I do not wish Mr. Zenkel any harm.”

Jillian C. York , director for international freedom of expression at the Electronic Frontier Foundation, a civil liberties group, said that the incident was a departure from Twitter's generally strong reputation as a supporter of free speech.

“Twitter has a pretty strong history in defending free speech. They've stood up for users in court. They've publicly written about their dedication to free expression,” said Ms. York. “Twitter needs to do more work this time around to make people trust them again.”

Murdoch\'s Tablet Daily Plans Layoffs

By AMY CHOZICK

The Daily, a tablet-only publication introduced with much fanfare last year by Rupert Murdoch of the News Corporation and the Apple executive Eddy Cue, said Tuesday it would lay off almost one-third of its 170 full-time staff members.

The news, first reported by All Things Digital, comes as the News Corporation prepares to split its publishing operations into a company separate from its lucrative entertainment assets. The Daily is scheduled to join the publishing company, expected to be formed within the next year.

In a statement, the media company reinforced its commitment to The Daily and said the restructuring “will enable the business to operate more efficiently and with even greater focus on the types of content that that consumers have gravitated towards since its launch.”

Late Tuesday afternoon, The Daily informed its staff that 50 full-time employees would be “released. ” The cutbacks will mostly affect the publication's sports and opinion sections, which see the lightest traffic. The Daily will no longer have a stand-alone opinion section and will get its sports coverage from partners like Fox News, according to a memo sent to the staff.

“These are important changes that will allow The Daily to be more nimble editorially and to focus on the elements that our readers have told us through their consumption that they like and want,” Jesse Angelo, The Daily's editor in chief, said in a statement.

He added: “Unfortunately, these changes have forced us to make difficult decisions and to say goodbye to some colleagues who have worked hard to make The Daily successful.”

The publication, conceived for the iPad, is in part a victim of high expectations. Mr. Murdoch introduced it as “the model for how stories are told and consumed” and praised the iPad as a means to make “the business of news gathering and editing vi able again.”

Last year, The Daily ranked third among the highest-grossing paid apps, behind Angry Birds and Smurfs' Village, according to Apple. But it didn't bring in the attention or advertising dollars needed to elevate it to the level of more established brands.

“We have consistently remained one of the top-ranked paid news apps since our launch,” Greg Clayman, the publisher, said in a statement. “Like all good digital products, however, we must change and evolve and remain fresh, competitive and sustainable.”