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Summary:

If there was ever any doubt that the animus towards Netflix (NSDQ: NFLX) runs deeper throughout Time Warner (NYSE: TWX) than chairman and CE…

Phil Kent, Turner Broadcasting
photo: Turner Broadcasting

If there was ever any doubt that the animus towards Netflix (NSDQ: NFLX) runs deeper throughout Time Warner (NYSE: TWX) than chairman and CEO Jeff Bewkes, get a load of what one of his top lieutenants had to say at the Citigroup Global Entertainment, Media & Telecommunications Conference on Wednesday in Phoenix. Turner Broadcasting chairman and CEO Phil Kent talked in depth about how the TV business is circling the wagons to marginalize the upstart streaming service.

Addressing what he called “the elephant in the room,” Kent singled out Netflix as the fly in the ointment when it came to the syndicated acquisitions two of his biggest cable properties, TBS and TNT, count on as key to their businesses. He spoke of a dawning awareness throughout the TV industry “to the long-term effect to having top-tiered programming on SVOD services,” he said, referring specifically to Netlix. “We tell our suppliers, the studios we buy from: This is going to have a significant impact on what we’ll be willing to pay for programming or even bid at all.”

But if you thought Kent was being hard on the studios–Warner Bros. is actually a corporate sibling of Turner’s–that’s nothing compared to what he says the industry is doing to Netflix to effectively block Reed Hastings from getting his hands on premium TV series. The new and old broadcast sitcoms and dramas Turner pays billions for may never even get an opportunity to be on Netflix because Kent implied SVOD rights are being “frozen” in the latest rounds of dealmaking.

“I think there’s a heightened sense across the industry of the importance of freezing those rights, and that’s what you see us from us in the future,” said Kent. “We’re going back to other series on renewals and attempting successfully to retroactively freeze the SVOD rights.”

Kent also talked up what he positioned as “a fantastic consumer alternative to SVOD”: TV Everywhere. He spoke of the progress the cable operators’ authentication strategy was making, including an upcoming deal with Comcast (NSDQ: CMCSA) that he indicated would set the standard for programming deals in that nascent area.

But Kent is not without some measure of mercy. He did say that Netflix still has a seat at the table, but for the scraps. He talked about a deal between Netflix and Warner Bros. TV Distribution for the FX series “Nip/Tuck,” a program that drew little interest from the TNTs of the world.

  1. Turner and pals just continue to act like fools. What they are really doing to trying to bully and control consumers, and punish them for embracing technology and the future. These execs are so self absorbed they think they can threaten you into making you pay for their crap by freezing out your other options for entertainment. They belong In Russia or a country whose media is controlled and whose content is controlled. Time Warner has struck an adversarial relationship with the future- with the future of tech, the consumer and the freedom to innovate. In essence they attack all that makes America great. They somehow don’t get that the junk that is on cable and that they charge for in order to fund their high living has reached it’s end. The days of paying big fees for bad content are sunsetting. The media has jammed bad entertainment down the throats of consumers for years and the bad economy has awoken the consumer to how he spends his money. And to tout the com cast deal announced today to stream as being an alternative to netflix is a joke. It proves they are clueless asmto what the issues truly are. Netflix didn’t go after them- netflix success coincided with the explosion in innovation in wireless, a cost conscious consumer, and technological revolution in entertainment. Old media doesn’t get it. They want to just give you more ways to watch the same crap and keep charging you for it. They think an adversarial relationship with new platforms will marry consumers to them- they are drunk on their own kool aid. Once you give consumers what netflix has given consumers, they never go back. Once you give someone control over their own entertainment, and respect them by innovating and not ripping them off they never go back. Time Warner would be wise to get off their arrogant pedestal and take a cue from others who are smart enough to not pursue adversarial rhetoric and bullying tactics in the press toward nerflix and the new world. They need to learn that whatever hostility they direct toward such a well loved and embraced platform like netflix is perceived as directed at the consumer. And memo to them- why don’t they really say what they mean and say their real goal is to neutralize the consumer by punishing them for pulling their cable out and opting for netflix. Think about it- they want to neutralize the American consumer and destroy their technology. Time for them to find another country before the foot they keep shoving in their own mouth chokes them to death.

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  2. Grace4, You are right on my friend.

    To Phil Kent: What are smoking? What circling the wagons? YOu have no strategy and all ou are doing is bad publicity. People won’t go for these kinds of empty rhetorics. You are attacking what people love and ultimately you are attacking them the consumers. Nice move smarty. You are forgetting, when you don’t bid for products of your suppliers to threaten them or Netflix? Big Deal. They will sell to someone else. The time has come for people to see and understand that they now have a choice and they don’t have to pay a high price and watch crap. They can now CHOOSE and pay for they like. This is America and not Russia. This is a land where people and businesses can compete and win. You are old news and still don’t get it where the technology is heading. One thing is for sure…This advancement of technology is the death of your businesses and innovators like Netflix will prevail. Consider yourselves done.

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  3. “Sometimes we… as the heads of the industry know what’s best for the consumer, and they will come to appreciate that over time, new technology or not.”
    – Senior Music Industry Executive (circa 1999)

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  4. Due to the success of Netflix they naturally will have to pay more for the content in the future but simply blocking them by freezing the topic of VOD in general is pathetic.
    http://www.tweek.tv

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  5. Grac4, spot-on analysis. The industry is doing the same thing the music industry did: assuming consumers won’t find a way to consume the media they want how they want it.

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  6. “Who the hell wants to hear actors talk?” — H. M. Warner, Warner Brothers, 1927

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  7. Netflix is a shell that has dominated the DVD rental market, been raped by its own inside execs., and is consequently in a cash-poor position. It has been free riding on bandwidth and now finds itself in a very weak position alongside the many with deeper pockets who want a piece of the streaming pie. Hastings is not a genius-he is worse than a used-car salesman and Netflix deserves the consequences of his greed.

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  8. Wish there had been more in Wallenstein’s article about pricing, which is one of the main reasons why TW even has an “elephant” to worry about.

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  9. David Polakoff Thursday, January 6, 2011

    With all due respect to my fellow Lehigh University alumnus, Mr. Kent (and I do have great respect for him):

    The traditional business model still feeds channel programmers and channel distributors with tons of cash, so both camps will continue to prop up the levee as long as possible. But with the DVD cash cow already starting to run dry, other elements of the traditional model will also soon be impacted. The tipping point for legacy businesses moving to new business models, which retain existing customers and attract new ones, and which generate sufficient revenue streams, is the Holy Grail. This is a huge challenge for mature stage companies, but it is critical for survival and they have to move, lest they travel to the cliff’s edge, as print and music have done. Consumers have decades of frustration and disdain for cable companies, so they’ll jump ship at the first opportunity. Channel programmers, whose bread and butter are affiliate revenue (advertising revenue, withstanding) will irk the ire of their consumer/fan base if programming content can’t be accessed however the consumer demands. Hence, the broadcast/cable channels slowly making more programming available off the traditional distribution pipes. This process will continue and not ease. Starving these outlets for content will eventually prove futile.

    PS – In another Paid Content post of today, read how the NBA/Turner may be on the “cutting edge,” “The NBA’s latest push for ubiquity and digital revenue could allow fans to bypass pay TV operators for access to live games.”

    http://paidcontent.org/article/419-ces-nba-digital-expanda-to-more-connected-tvs-and-adds-premium-live-gam/

    David Polakoff

    “The Winter of Our Content Distribution Discontent”
    http://davidpolakoff.wordpress.com

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  10. Well written David!

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