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Warned by an interviewer at today’s Goldman Sachs conference hat he was about to talk about cordcutting, the subject that won’t go away, Time Warner (NYSE: TWX) CEO Jeff Bewkes couldn’t resist a bit of a joke. “The cordcutting that won’t go away won’t come either. It hasn’t arrived yet.”
He hastened to add that he isn’t being complacent about flat or declining video sub rates but he attributes that more to the economy than a shift in viewing habits away from pay TV. He later mentioned that internet viewing makes up one percent of all TV viewing.
Bewkes was one of the earliest and loudest proponents of efforts to make sure viewers who want to spread beyond TV have reasons to stay with pay and he remains convinced it’s the best way to keep and add viewers. His elevator pitch for TV Everywhere hasn’t budged since he launched the effort in 2009: “If you pay for access to programming,we think you should have it on demand on any device wherever you want.”
He earned bragging rights with HBO GO, which allows subscribers to watch current and library HBO content on demand across platforms and devices. The catch? You can’t get access to HBO GO unless you have a multichannel provider who has a deal for the service with Time Warner. I can get it through DirecTV (NYSE: DTV), which like Charter (NSDQ: CHTR), Cox, launch partner Verizon Comcast Xfinity and others but not through
Comcast (NSDQ: CMCSA) — or Time Warner Cable (NYSE: TWC), which was part of the early test but has no deal now.
Cinemax has a companion app and Turner just launched a version for its basic cable net TNT. It’s not premium programming like HBO but the only way in is through authentication.
As head of a company that owns both networks and Warner Bros., Bewkes also needs to make the most out of licensing so it’s not too surprising he’d rather see Netflix as a checkbook than a competitor. He told investors: “We are quite happy to give vigorous licensing to all the SVOD (subscription video on demand) companies, including Netflix (NSDQ: NFLX). … We don’t see that as competitive to them in the sense that we wouldn’t license.”
But he also doesn’t want to undercut his other licensing or the value of those networks to operators: “Don’t sell products into a platform where you end up with less money than when you were selling it to the previous buyers and there is a place for everybody in this. The place we thought — and do think — for SVOD is essentially for movies or TV shows that don’t have a higher value and a higher monetization capability in the other networks like syndication, basic cable networks with first to run, re-runs like TNT and USA, etc. They take pretty high prices, they have regular audiences. They have a very powerful economic model that pays huge fees for TV serials or movies into studios like Warner.”
Where Netflix, Amazon (NSDQ: AMZN), Hulu Plus and the others come in handy is “they are licensing products that have a higher value in that window than where you could if you were selling it to somebody else.” (He only identified Netflix by name.) Bewkes doesn’t rule out licensing in the syndication window “provided they are paying higher price than the syndication buyers or the basic cable buyers.”
He suggests a serialized drama makes the most sense as a “sustainable” model for SVOD — and “we think it’s a big ad to the economic market for us as a producer who sell through it and we think it has no detrimental effect through the powerful cable program networks like TMT USA certainly not HBO. So it’s all working out as a net plus for everybody including consumers.”
Correction: Comcast is a provider and was there early on. When I was looking at the HBO chart referenced above, I made the mistake of checking for Comcast — not Xfinity, its brand for cable services. I know better and I regret the error.