Time Warner chief executive Jeff Bewkes: Business cost reductions driving growth Media titan Time Warner is endeavoring to trim business costs as it works to rectify mistakes that bloated its balance sheet.

Time Warner chief executive Jeffrey L. Bewkes is aggressively pushing the company to achieve business cost reductions, especially as it faces an uncertain future in some segments that have performed well over the past decade. Bewkes is overseeing a business cost reduction program that investors and shareholders have backed, but some analysts question how successful it will be.

The New York Times reports the company will soon move out of its prime real estate overlooking New York's Central Park, an office building Bewkes asserted was an "indulgence" that former management oversaw. Expensive office buildings and other excesses have led to soaring business costs, and Bewkes has made it his mission to significantly reduce overhead.

"There was a burgeoning overhead reaching $500 million a year, including this edifice you’re sitting in," he said in an interview.

Scaling back its expansive real estate portfolio in New York, one of the most expensive cities in the world, could help the media company to trim as much as $150 million per year from its operating expenses, according to the Time Warner show runner.

Bewkes affirmed Time Warner suffered as a result of the wave of acquisitions it undertook over the past decade. The company's balance sheet ballooned, analysts assert, and that has left Bewkes in the unenviable and precarious role of trimming the corporate fat.

The company is suffering under the weight of its past expenditures, but the firm's third quarter earnings report – released last week – underscored the relative strength of some of its businesses. Still, analysts said the firm's earnings were boosted by the stellar international performance of the final Harry Potter installment, a film series that has contributed more than $8 billion to the company's bottom line.

Time Warner reported revenues rose 11 percent to $7.1 billion compared to the same period in 2010. What's more, the company said operating income jumped 18 percent, allowing executives to institute a buyback program aimed at bolstering its share price.

"Our results demonstrate the success of Time Warner’s focus on investing in great content that audiences love and leading the evolution of how it’s delivered. Warner Bros. had a record-setting quarter, led by Harry Potter and the Deathly Hallows: Part 2, which grossed $1.3 billion at the box office globally, ranking as the 3rd highest grossing film ever and capping an unprecedented franchise run," Bewkes said in a statement.

With the Harry Potter franchise ending, cost cutting is becoming increasingly important for Time Warner, experts say. The company can no longer rely on the boy wizard to fuel earnings, and that has led Bewkes and other executives to intensify their efforts to make business cost reductions.

Aside from its push to reduce expensive real estate holdings, Time Warner is also consolidating shared services, including its human resources and information technology departments. Analysts contended such measures could bolster the business cost reduction efforts, ultimately improving efficiency.

In total, Time Warner's cost reduction efforts are projected to save as much as $500 million annually, according to The Times. By reducing overhead, Time Warner hopes to increase investment in content. Trimming costs have enabled the company to increase investment in the division at a 7 percent annual pace since 2008, underscoring how its business cost reduction program is fueling the firm's growth.

"The idea is to take money being spent on insignificant things out and put it into significant things which are programming, journalism and digital translations of our products," Bewkes affirmed.

Bewkes said he would continue to stress the importance of cost cutting in the future. The initiatives are working, as Time Warner said in its latest earnings report that it achieved its highest growth rate since the third quarter of 2007.
 
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