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Turner Chief Explains How TV Industry Will Neutralize Netflix

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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.

18 Responses to “Turner Chief Explains How TV Industry Will Neutralize Netflix”

  1. Anything Bewkes says right now is just talk. He’s been evangelizing “TV Everywhere” for some 18 odd months now and I have yet to see a viable competitor to DISH Network’s TV Everywhere platform that has already been brought to market. I can tell you as a DISH employee and customer that I take comfort in the fact that the company I subscribe to (and work for) has put out a better, reliable solution for watching live TV and DVR recordings on a myriad of different devices (smartphones, laptops, tablets). I can also say, as a customer, that I enjoy using my Galaxy S phone to access that content during my down time. The convenience factor is simply amazing.

  2. I don’t see why you people have so much trouble with what this guy is saying.

    He’s only gonna pay for shows that you can’t watch elsewhere.

    Why should I pay top dollar for reruns of Mismatch, when people can see em on another network? I’ll pay top dollar if they can ONLY be seen on my network.

    And Netflix is another network.

    No collusion here, this is bizness.

  3. Jason K

    “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.”

    Tough talk for a guy who himself is getting his seat at the table knocked right out from under him. Guess what? In the end, the people decide. The people are favoring services like Netflix and no longer want to watch normal television.

    Broadcasting companies and cable companies are going to have to take a haircut eventually. I suspect some will go away all together.

    And by the way, regarding the post made by “Smartesse” – what planet did you come from? Spend 5 seconds on Google Finance and prove yourself wrong.

  4. frankz00

    HAHAHAHAHA!!! Go ahead and “neutralize” NetFlix if you want…. All that means is that you’re going to get the hell pirated out of your content. Consolidation is king, baby!!!

  5. invitedmedia

    mr. feldman,

    first thing i thought too.

    but let them collude. just look what the newspapers did with the much-balleyhooed journalismonline (now press+) to see how that’ll work when you get them all into one room.

    herding cats will look like child’s play

  6. I find it amazing that Mr. Kent effectively admitted that the cable networks have formed an illegal cartel to deny rights to their content to Netflix. I thought that Jeff Bewkes was out of touch with reality, but that’s nothing compared to admitting being a part of illegal restraint of trade.

  7. David Polakoff

    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.”

    David Polakoff

    “The Winter of Our Content Distribution Discontent”

  8. Ian Lamont

    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.

  9. Smartesse

    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.

  10. 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.

  11. 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.