Blog Post

Time Warner’s Bewkes: Internet Video Is Overhyped, Cable VOD Isn’t

With the TV upfront season gearing up, many media executives have been touting the increased web-related efforts of their respective networks, most notably, the NBCU-News Corp. online video venture. But as AdAge notes, Time Warner President and COO Jeff Bewkes isn’t going to be one of them. In an interview with the magazine, he expresses the view that the hype about online video is too one-sided. Secondly, he feels that cable VOD has the most potential to bring in revenue.

TW had $44 billion in revenue last year, with cable bringing $12 billion in revenue to the table, followed by AOL’s contribution of $7.8 billion. Filmed entertainment, which includes Warner Bros. TV programming, and networks and houses HBO, each accounted for $10 billion. HBO is the top driver of VOD streams in homes with cable, AdAge noted. The reasoning for Bewkes’ view is simple: studios like Warner Bros. will have an increasingly difficult time garnering $13 million from advertisers for an episode of ER, if an iPod user can cut out the middleman and download it for $1.99.

Bewkes, who is expected to ascend to the post of CEO of TW, would like to see broadcast networks devote more resources to VOD. He doesn’t believe an online subscription-only model is in Time Warner’s best interest, arguing that, “The future of VOD on iPods or hand-helds doesn’t have to be pay-per-show; it can be ad-supported.” In particular, Joan Gillman, president of Time Warner Cable Media Sales, said automotive is a category likely to increase its spending on VOD initiatives. As for internet companies like Google that are trying to find on an entree into the local-spot-cable business, Gillman says: “We have a very healthy business. We don’t need Google. We have relationships with local car dealers and restaurant groups. … We are testing and evaluating set-top-box measurement. We have all the pieces; we don’t need a middleman.”