Time Warner Likely Won’t Bow Own New Online Video Channel, CEO Says
Though Time Warner’s Warner Bros. studio produces much of the hit TV programming on the air today, the company does not expect to apply that expertise toward creating a new broadband network of original programming, CEO Jeff Bewkes said Wednesday. “We're the lead supplier of basically everything to every network,” Bewkes said of its studio. “So far, we think that’s the best way to play it,” he said during an earnings teleconference.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
Bewkes’ comments were in response to a question from BTIG Research’s Richard Greenfield, who suggested the company could try to do for premium broadband video what it did for premium cable video when it introduced HBO decades ago. But Bewkes appeared content with the status quo of the studio creating shows for other networks rather than selling them directly to consumers. “It doesn’t really make sense for us to create an all-genre network on VOD and put it out over the Internet,” Bewkes said. Existing networks already do a good job of developing programming and telling consumers where to find it, he said. “If you think of the huge demand that’s coming from all the existing networks and now the subscription VOD networks [such as Netflix], it’s a tremendous demand for us to program to and sell to."
And selling content to subscription VOD (SVOD) services is a big opportunity for Time Warner, said John Martin, the company’s chief financial and administrative officer. Time Warner is on pace to take in more than $250 million in SVOD revenue this year, he said. “We remain in constructive dialog with a number of SVOD companies, so there’s a good chance that could go up before the end of the year,” he said. The bulk of that revenue is attributable to TV shows rather than movies, he said. Revenue from Netflix makes up between 40 and 45 percent of that total, he said.
Time Warner will continue to acquire sports TV rights, but only when it makes sense to do so, Bewkes said. “We think we're in a very good position with the sports rights we have now,” he said. “If an NFL package came up, and I think they are considering how they want to handle that, just like with the NCAA we would consider it, but we would only do something of that size if we were confident we could monetize it,” he said.
Though broadcast TV ratings are lower than expected this year, the shows produced by Warner Bros. are performing well, Bewkes said. “Some of the pressure on broadcast ratings is clearly coming from viewing on alternative platforms,” he said. “While it isn’t being measured as well as it will be soon,” VOD viewing of hit shows increases their value, he said. “These are good trends for us."
Q3 sales at Time Warner fell 3 percent from a year earlier to $6.8 billion on declines in its film, TV studio and publishing units, the company said. Net income increased 1.9 percent to $838 million.