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

53 Comments

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 Comments

Don

I’m getting ready to cut the cord too. So tired of paying 100 bucks for just junk. Oh yes my household brings in for 100,000.00 per year so I guess I’m not low income either

Sheri Herman

Thanks for penning this article. Having been in the cable industry a long time, I just commented on a different article here and was startled to see my comment so similar to Jeff Bewkes. Guess I learned a few things. The only issue I have with this article is the cable industry bowing to the a la carte model. It’s the networks who will push back hard on this. Getting paid a license fee per subscriber available to that network – not actually watching it – is what makes these networks able to pilot new shows. I can see them offering an a la cart option on top of existing carriage, but not replacing it.

Groucho

I think that his data source may be flawed…when you cut the cable, the rep asks why, and we pretty much all say the same thing…”I’m tired of paying for cable”, which falls into the ‘can’t afford it’ button on the questionnaire. The rep certainly doesn’t ask the (appropriate) followup question, “Can you afford it?”. This results in the data is to generalized to make an accurate portrayal of what’s actually happening.

In addition, the CEO was making this presentation to a bunch of investors in NYC. So even if the CEO had better info, would he really spook investors by stating that ‘we’re losing our target market’?

DG

I hope he keeps this attitude. I’m a time warner customer and have some concern they might start capping bandwidth use to deal with people who stream all their content and don’t have a cable subscription. I’m in the boat of many others… younger professional, not rich, but at all low income.

digibandit

the recent election demonstrates that there are a lot of folks out there young and old from all income groups that don’t want crappy reality -on Cable or in Life -SO you keep asking us to pay for your redneck crap programming and watch those cords get sliced away like shit velveeta cheese.

John

So dang tired or watching 45 min of advertising and 15 min of show its sickening TV has become crap! Cord-Cutter.

Bob C

Bewkes comments are just subterfuge- part of the PR campaign to convince those reading it who might consider cutting the cord that it is only a small minority doing it, and only because they have low income. He knows exactly how much cord cutting has effected the cable business.

The ever rising cost is just one factor that got me to cut 4 years ago. It’s also having to pay for channels I never watch. Another important factor is that there is just not that much out there worth watching – at any price. And if the industry is not willing to provide me with a method to pay for and watch only what I want, then yes, I’l opt out of the whole thing. I am fortunate enough to be in an area where I can get 30 channels for free over the air, so the two shows I do enjoy are still available.

But the most annoying reason I cut the cord was the commercials. And No Jeff, making them more interesting will not bring me back. Making less of them might, if the price is right. The TV industry survived just fine for it’s first 40 years with no more than 10 minutes of commercials per hour of programming. And that was it’s only source of revenue. Now that they have a confined audience with cable, that figure has doubled. And in the case of some cable only programming – more than doubled. So not only are you watching more ads, but you’re also paying to watch them now. All those commercial breaks, ruin a movie or 1 hour drama for me.

Go back to no more than 10 minutes of commercials per hour and offer me a a la carte pricing, and I will seriously consider signing back up. Until then, Hi Def over the air for free is very nice indeed. Roku and an occasional Red Box rental fill all my other needs.

Biteme

I too am a young, professional, not low-income consumer that is greatly amused by this tripe.

The reasons I and many others don’t subscribe to their archaic services are a distinct lack of anything resembling “quality content”, a business model that is horribly antique and inflexible, and overpriced.

Let me choose 2 channels at $5 a month per and I’ll be interested. Till then, enjoy the sand you have your head lodged in.

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