LOS ANGELES (AP) -- Time Warner Inc.'s profit growth is seen facing new challenges as it reports earnings for the final quarter of 2011 before Wall Street's opening bell on Wednesday.
The company's share price has been boosted by share buybacks that have concentrated profits among fewer outstanding shares. But those buybacks are seen slowing in 2012, while its Warner Bros. subsidiary will be looking for new hits after it released the finale of the hugely profitable "Harry Potter" series on DVD in December.
WHAT TO WATCH FOR: The New York-based company's search for new ways to boost growth, such as through its pay TV networks CNN, TBS, TNT and HBO, and what it says about new franchises that will replace "Harry Potter."
Over the last year, Time Warner is estimated to have bought back $4 billion in stock, accounting for nearly 43 percent of the per-share profit growth in the fourth quarter, according to Evercore Partners analyst Alan Gould. He expects the rate of buybacks to slow to half of that in 2012.
Audience ratings are expected to have fallen 2 percent in the quarter from a year ago as TBS ratings got a boost from reruns of "The Big Bang Theory," but TNT suffered from a lockout that delayed the start of the pro basketball season to Christmas Day from Nov. 1.
This year, the company should see a boost in political advertising revenue at news channel CNN with the presidential race in full swing, but Wedge Partners analyst Martin Pyykkonen says CNN "is not a big needle mover" relative to the size of Time Warner's entire TV network portfolio.
WHY IT MATTERS: Since shedding Time Warner Cable and AOL in recent years, Time Warner is a pure-play content company built on pay TV subscriptions, TV and movie sales and advertising. Its results are indicative of consumers' attitude toward their discretionary income, but also help tell the tale of how technology is changing behaviors.
WHAT'S EXPECTED: Analysts, on average, expect earnings of 87 cents per share on revenue of $8.07 billion, according to data provided by FactSet.
LAST YEAR'S QUARTER: Time Warner posted adjusted earnings of 67 cents per share on revenue of $7.81 billion.
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