With the same rate on both forms of income, the tax code doesn't bias corporate decisions on whether to retain and reinvest profits (and allow the earnings to be capitalized into the stock price), or distribute the money as dividends at the time they are earned.
Time Warner posted strong fourth quarter earnings on Wednesday as the company capitalized on the continued success of Harry Potter and the Deathly Hallows Part 1, growth in networks stemming from advertising and subscription growth in HBO and TVS, and improved productivity in its publishing unit, Time Inc.
Strong earnings from Walt Disney were announced after the bell on Tuesday, as the media and entertainment group capitalized on its most valuable asset, its media networks segment, which operates ESPN, ABC and other channels.