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Time Warner CEO: Cord cutters not an issue, “cord nevers” might be

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Few people are trading in their cable services for digital alternatives, according to Time Warner (s twx) 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 (s nflx) or Amazon (s amzn) 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 (s aapl) 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'(s tri) Chrystia Freeland at the Paley Center for Media’s “Innovation without Borders” event. (Highlights available here).

(Image by holbox via Shutterstock)

53 Responses to “Time Warner CEO: Cord cutters not an issue, “cord nevers” might be”

  1. I have had cable for many years and just cannot afford it yet. In the area that I live in the local cable company has become an internet service provider. I believe all the houses in the neighborhood except for one or two have converted to over the air programming and combination of all the other services you all mention. This neighborhood is by no means poor. I am probably one of the lowest incomes and i make over 100k per year, college educated in IS. WILL NEVER GO BACK TO CABLE. I see reality all day, every day. When i go home to watch TV I just want to sit on the couch and drool on myself and not have to think about reality. They can keep that. Cable should make programming available by channel at a low cost. Maybe then I would consider getting some local channels if they drop the multitude of other charges on their bill (tax for this and tax for that, connectivity fee, and look out the window waiting for your cable dude for three days fee), HAHaHa that’s going to happen, no they will keep the fees on and channel packages that are too expensive in order to try and pay those CEO type people six figure salaries and bonuses just so they can sit in a chair all day and guess what is happening out there. Well Mr. CEO man you guessed wrong this time around. I know there is a whole generation of young’ns that will not be paying for your guess.

  2. I am sort of a cord cutter. Due to geographical location I cannot receive any over the air stations so I am at the moment considering searching the cheapest package from a satellite provider or cable provider that would allow me to receive just a few local stations for live news. Other than that they can keep their premium content. Movies and cartoons for the kids we get through Netflix, Hulu, Vudu, Amazon and others alike. Sports I watch I purchase PPV and that cuts my monthly bill with internet to about 100/month including phone service. Over 30 and not low income. When I move into flatter land their cable lines will have lost another customer.

  3. We cut the cord this july and realized just how much we wasted on Cable.($200/mo for the bundle and no prem. channels)
    I can afford cable just fine but paying for garbage and repeats of stuff that aired 10 times in a year , (plus 35% of run time for an hour long show is commercials) was a terrible waste of money. The funny thing is, with netflix we probably watch more tv now than before because we pick what and when to watch. Screw Time Warner and screw this idiots over-inflated view of his grip on consumer choice. I’m done with cable for good.

  4. Jenn WinterRose

    TWC calls me ALL THE TIME to offer bundles and upgrades and stuff, and every single time I tell them that we are fine with our internet-only existence, and that we don’t even own a TV anymore. The shock on the other end of the line is always hilarious. I’ve not had a land-line phone in 15 years, and I’ve not had cable tv since 2009. We stream everything. We can watch what we want, when we want. Why would we pay for cable? I’d only want like 4 channels out of the 200 to 500 channels I’d be paying for. Now… offer a-la-carte and maybe we can talk.

  5. This is a one sentence article, “Young people are smart enough to torrent (for free) anything that is on TV, slightly older people are smart enough to surf the web until the content is placed on a free outlet, old people are confused about why they have to pay for propaganda.”

  6. Classic example of someone attempting to conflate “low income” with whatever threat they’re worried by.

    Go ahead and call me low income it won’t make me any less glad that I once paid for cable and now no longer do (haven’t paid for cable for 8 years now and only paid for about 2 before that).

  7. atxformfactor

    Remember who his audience is. It’s the shareholders. The shareholders cannot be made aware of a major disruptive force to the profits, at least not before contingencies are in-place. They’ll find some Black Swan to blame a major drop of revenues on instead of this issue because that can be rounded off on the quarter.

  8. Nick Newman

    It’s tough to be a CEO: To be disingenuous for the sake of your company and your shareholders takes some real cognitive dissonance. He knows that cord cutters are not “low income” and he also realizes that having more content distributors is worse for the consumer and better for Time Warner. Netflix was gutted by content providers because they were getting too much power. Give people an alternative where they can download and pay for any show, any movie, and they will pay for it. Unfortunately, the big studios, like in the music industry, are unwilling to cede that power to a yet-to-be-named provider that we’re all clearly ready for!

  9. Jeff Bewkes is not laying claim to the truth for probably many reasons. He surely knows that the cable industry is next in line for what the recording industry has gone through. Pretty soon subscribing to cable will reserved for just sports-minded people and people who are too stupid or lazy to get their content by a far cheaper means. It’s about time for the cable companies karnic debt to come due.

  10. I am a cord cutter from 2002. I had Charter Communication in Asheville, NC then got a house North of Asheville and went with DirecTv. I am happy with DTV because they offer programming that cable either won’t or can’t. I am in the television industry for almost 29 years and yes the cable companies are suffering because they can’t or won’t compete with the satellite companies programming and price options. I get all the television & radio trade publications. I have not listened to radio in 5 years as I also have Sirius Satellite radio. I have my reasons for that as well.

  11. David – you are supremely misguided.. His comments are based on fact – less than .5% (yes, point five percent) of american pay tv subscribers have dropped their cable or satellite service for TV over the internet.

  12. ffffffrabbit

    We, both professionals, have been cord cutters since 2004. We cut the cord because of a few things:

    1. US Television has become reality TV vs real creativity.
    2. US Television is copy/paste from the UK.Why should I watch the copy when the original is better.
    3. We only want to watch what we want, when we want without the cost of DVR, Tivo or other additional cost
    4. Commercials. I can understand OTA TV having commercials, but why should I pay for Television with commercials? Providers need to choose:

    * Television with commercials (and to watch is free)
    * Television without commercials (subscription)

    5. DVDs are available less than a year. I just have to be patient, usually in less than 6 months I can see everything worthwhile on cable … one episode after the other. It makes a rainy weekend a great experience.
    6. We get outside and not stuck to the television.
    7. Since there are no commercials we aren’t just sitting down wasting. Which means Fox Animation Sundays that take 2 hours (120 mins) for everyone (including commercials) we watch the shows Monday for 84 mins, we saved ourselves 34 mins of commercials.
    8. We save $100 a month. Which means we can go to the movies, have dinner out and afford to see the sporting event live. What would you do with $1200 a year?
    9. No Sport Blackouts. We can watch UK, Canada, India … any international program unedited. Which means we have 1000% more content than any TV subscriber.
    10. Instructional shows (DIY, FOOD, Crafts, etc …) are easier to follow if you have control of the content. Easy to save and replay.

  13. ESPN should take their content off basic cable. The amount they charge for their channels are makes rates constantly go up. It’s not fair to the consumer who never watches sports.

  14. CordCutterForum

    Well I for one find this a bit insulting. Not the whole personal income assumptions he’s making but the obvious, however understated, jab at cord cutters in an attempt to stigmatize cord cutting as something only poor people do.

    If anyone is interested we’ve got a poll going (completely anonymous!) if you’d like to let Mr. Bewkes see our growing community of cord cutters along with how wrong his data on us is:

  15. 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.

  16. 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.

  17. Dapper Dan

    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?

  18. 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

  19. 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.

    • “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.

      • 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!

  20. Billy Bob

    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.

  21. “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.

    • 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.

    • 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.

      • mfocazio

        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.

    • Lisa Shields

      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.

    • 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.