Warner Q1 DVD sales fall

Earnings drop on lower VOD sales, higher interest costs

By Danny King -- Video Business, 4/29/2009

APRIL 29 | Warner Bros. Entertainment’s first-quarter DVD sales fell from a year earlier as demand for current releases such as Body of Lies failed to keep pace with year-earlier titles including I Am Legend.

Time Warner Cable earnings dropped as falling demand for video-on-demand and premium cable channels and higher interest costs offset increasing sales from its Internet and telephone services.

Sales from Time Warner Inc.’s filmed-entertainment division declined 7% to $2.6 billion, the company said in a statement today.

Warner Bros. Entertainment’s operating profit increased 17% from a year earlier to $214 million on lower costs related to advertising and restructuring.

Warner’s declining DVD sales reflect an industry in which the recession and the second-quarter Easter holiday caused first-quarter U.S. spending on DVD rentals and purchases to fall 7.4% from a year earlier to about $4.8 billion, according to Video Business research.

Warner's best-selling DVD for the quarter was The Dark Knight, which was released in the fourth quarter and was last year’s top-selling DVD. It was No. 11 on the Q1 Top DVD Sellers chart, according to Video Business research and Rentrak. Warner's Body of Lies, released in February, was the seventh most-rented title of the quarter.

Time Warner Inc., which divested its majority stake in Time Warner Cable last month, had a 14% drop in net income, largely on a loss taken by its publishing division, as revenue declined 7% to $6.95 billion.

Meanwhile, Time Warner Cable, the No. 2 U.S. cable company to Comcast, said today that its first-quarter earnings dropped 32% despite a 4.9% increase in revenue, largely on higher interest costs. Additionally, while sales from its video services rose, consumers spent less on premium-cable channels and video-on-demand services than a year earlier, the company said.

Viacom reports earnings tomorrow, and News Corp. and Walt Disney both report earnings next week.