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Summary:

A media CEO reminded people that, despite new internet distribution platforms, content owners remain in the drivers seat. He played down the idea of “cord cutters” but did acknowledge the emergence of people who have never had cable at all.

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Few people are trading in their cable services for digital alternatives, according to Time Warner CEO Jeff Bewkes. He argues that “cord cutting” is overstated and that the phenomenon is limited to a small segment of low income Americans.

Speaking Friday morning in New York, Bewkes also expressed confidence that the TV business is not threatened by the likes of Netflix or Amazon because these services are largely distribution platforms that don’t own the quality content audiences want to watch. He added that such platforms compete with each other and not with traditional TV companies.

“It’s a good thing to have more of them,” said Bewkes, adding that multiple universal platforms are good for consumers because they mean the content industry “can’t be held hostage” to a given distributor.

Despite his dismissal of cord-cutting, Bewkes did acknowledge the emergence of “cord nevers,” which are younger people who never acquire cable in the first place. For them, he said it’s not a question of money — “they can afford three Starbucks a day” — but rather different habits and expectations. Bewkes pointed out that the “cord nevers” are not receiving the best content (it will be interesting to see if this argument one day sways them into signing up).

In the meantime, the traditional cable model is under other strains, including the spiraling cost of sports. As Bewkes noted, “half of the population that doesn’t want sports is subsidizing the other half that does” because the former are forced to buy expensive sports channels they don’t want as part of their cable plans.

All of this suggests that the cable industry will finally have to give in and offer consumers a full-blown a la carte model — but don’t hold your breath. As Peter Kafka has pointed out, even a company as rich and powerful as Apple has proved incapable of dislodging “the TV industrial complex.” The simple reality is that the mighty incumbents are going to ensure that a cable subscription remains a toll to get access to things like HBO and the NFL on the iPad.

Finally, there is the question of advertising. According to Bewkes, advertising-only models are not viable for most types of content, pointing to the era of the big three networks as a “wasteland” for TV. He called on companies to make more ads that people want to watch, citing a James Bond trailer or ads in GQ magazine as examples.

Bewkes made the remarks during a chat with Reuters' Chrystia Freeland at the Paley Center for Media’s “Innovation without Borders” event. (Highlights available here).

(Image by holbox via Shutterstock)

  1. I am a cord-cutter. I am young, I am a professional. I am not “low-income.” And I will NEVER go back to cable.

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    1. I am also a cord-cutter, only I am OLD, a professional, and not “low income.” I, too will never go back to cable… and frankly have no idea what this “best content” is that he’s talking about.

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    2. Adam – what happens when NetFlix and Hulu don’t carry the shows you want to watch as early after they air as they do today. You won’t go back to cable if things stayed the same, but they’re not going to stay the same for long.

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      1. I think that this argument “the shows you want to watch as early after they air as they do today” is one that seems to be cited over and over again by those who think cord-nevers aren’t a real factor, but, to make a strong point of it…it’s just TV…when I watch it is largely irrelevant…I don’t care that I’m not seeing the latest episode, I’ll watch it when it comes along. This – this is the thing that should have content distributors worried – the fact that TV programming simply isn’t that important to a growing number of people.

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    3. Agreed! I am under the age of 30, college-educated, a professional, married, and high income. We paid for cable for about 4 years and gave it up about 2 years ago. Do not miss it at all. Thanks to Netflix, Amazon Instant Video, and cable stations streaming some shows for free on their websites. I refuse to pay $90 for 90% crap.

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    4. I, too, am a cord-cutter. I am a young, college-educated, professional. I am not rich, but I’m far from being “low-income”. I have absolutely no reason to go back to cable. Between Netflix (for movies and older shows) and Vudu (for next-day-air television a-la-carte), I can get anything I want to watch for less than 1/4 of what I was paying for a cable subscription.

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  2. “He argues that “cord cutting” is overstated and that the phenomenon is limited to a small segment of low income Americans.”

    Yet another example of how out of touch CEOs of large corporations are with the average American.

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    1. high income cord cutter Monday, November 19, 2012

      It did sound a bit like the Romney 47% statement

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      1. Except that Romney’s statement was accurate (see results of election and current economic and racial climate).

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  3. Content is king and a smart move on Disney for their efforts in both the Marveand Star Wars franchise. Its too bad that Parsons was too stupid to leverage the contents of TW for AOL. Oh well.

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  4. CEO has some really bad intel. I make over 100k per year and cut the cord 2 years ago. not paying $120 + for commercials and channels that NOBODY watches… Get a flat antenna that picks up all local channels in HD plus many more and include Netflix and hulu plus or amazon and you are set.

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    1. “CEO has some really bad intel. I make over 100k per year and cut the cord 2 years ago.”

      You are one person! You can’t generalize your situation to say that the CEO (who probably has access to data that you don’t) has bad intel.

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      1. The data overall may show that many people are “cord-cutting” because they just can’t afford it anymore but its also true there is also a large and growing group of tech-savvy viewers who can afford it but choose other (legal) options. I’d say we watch a LOT of TV but downgraded our cable to broadcast basic (about $15/month for local channels) about 7 years ago with little impact on our viewing habits. We watch almost all of our TV on Netflix, Hulu and Amazon on our schedule and choose what to watch when we have time instead of watching whatever is on. Even if we were to purchase a few seasons of a current show on Amazon every month, we would still save a ton of money over a regular monthly cable bill and only pay for what we want and never get sucked into those mind-numbing reality shows!

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      2. @Rich, he isn’t alone. I do the same thing with a similar salary.

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  5. “quality content”?

    Did they finally get some of that?

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  6. We cut the cable 4 years ago, two kids are growing up with Netflix and YouTube, and have perception about TV like us about AM radio.

    Good luck running cable companies when these kids grow up.
    – IvanTO

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  7. I never got cable after I left for college- and I also don’t watch $100+ of tv a month now, I watch maybe $5-10 tops, all a la cart.

    Their problem is that it doesn’t occur to me to look for places to buy that $5-10 content when the torrents and streaming are so easy and free. Every time I tried to get things legitimately there was some hangup. Constant re-buffering. Lack of portability. Time limits that ran out before I had time to watch them.

    Why would I try that again?

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    1. You’re so right. The content providers and distributors have made it attractive to go the non-legitimate route for reasons that go way beyond saving money, and lots of other people have observed the same thing.

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      1. @Rich, strike 2, content can be purchased via Amazon & Apple. Which is what I do, we buy a few shows.

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  8. I’m a cord cutter and will NEVER go back to cable, even if I become a multimillionaire. The biggest problem that these TV execs don’t seem to realize is that most people who cut the cord find out very quickly that they don’t miss the “premium content.”

    I used to enjoy HBO and some other channels and shows… but when I cut my cable, I realized pretty quickly that I didn’t NEED all of these shows. I can watch some stuff from over-the-air broadcasts, some stuff from the web, and some stuff from Netflix, and that’s perfectly fine for me. I don’t miss having 200 channels. I mean I REALLY don’t miss it.

    When TV execs realize that the demand for premium content is much more elastic than they think, they’ll start to worry about cordcutters.

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  9. Jeff Bewkes doesn’t know what he’s talking about.

    Despite being CEO of one of the biggest content companies, he doesn’t understand the dynamics of the industry that he’s in.

    He will be proved wrong with his claim that advertising-only models will fail. He hasn’t seen what Google can do. We’re going to get one dominant and successful player in TV advertising, and that is going to be Google. No other company is in a position to compete.

    Content creators will create programs to feed upstream to Google TV. There is no other way this scenario can play out.

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  10. If you love horror movies “cord cutters” or “cord nevers” than their is a new network going viral October 2013. http://www.FRIGHTCORE.com http://www.twitter.com/frightcore New, On-demand horror movies to all your connected devices.

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