Why Bewkes’ Q4 Bluster Won’t Rattle Netflix

Jeff Bewkes

It wouldn’t be a Time Warner (NYSE: TWX) earnings call without some tough talk from CEO Jeff Bewkes, who suggested he’ll put the screws to Netflix (NSDQ: NFLX) and Redbox by increasing the 28-day window for DVD releases. While that’s definitely bad for Redbox, Netflix won’t be sweating much.

“The current terms are not commensurate to the value of our films,” Bewkes told analysts on the earnings call Wednesday. “The value should be considerably higher than what we are getting now.”

There’s a reason Netflix’s stock wasn’t impacted by Bewkes’ comments. Smart investors should know that while Redbox and Netflix are frequently combined in the same sentence because they are both the bane of the studios’ existence, they actually have very different businesses.

If the 28-day window is increased to 45 days, as some analysts have suggested, Redbox will feel the pain because the service trafficks heavily in new releases. Even the current 28-day window has proved hurtful as we saw parent company Coinstar slash its fourth-quarter outlook weeks ahead of tomorrow’s earnings announcement.

“This was Redbox’s first holiday season with 28-day delayed titles, and we underestimated the impact that the delay would have on demand during the fourth quarter,” CEO Paul Davis said in his outlook revision.

But the 28-day delay has very little impact on Netflix, and it’s not just because they are moving so swiftly to a streaming business that’s unaffected by that timespan. Whether on physical disc or digital stream, Netflix is all about library content, not the latest releases.

Chief content officer Ted Sarandos underlined this misconception in an appearance last month at the NATPE conference.

“Redbox didn’t fare as well in the 28-day delay as we did because our model has never been about seeing movies as quickly as possible,” he said.

Which isn’t to say Bewkes doesn’t have other ways of making Sarandos’ life miserable, like keeping away streaming rights to a ton of the library TV content Time Warner has across its many cable channels. But that’s another matter entirely.

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