AOL Net Execs: Harmony Reigns

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The jury is still out on whether the coupling of pay-TV giant Home Box Office and basic-cable juggernaut Turner Broadcasting System Inc. under AOL Time Warner Inc.'s new Entertainment and Network Group will yield strong dividends for the struggling parent company.

Prior to the corporate restructuring, Home Box Office, headed by Jeff Bewkes, and TBS Inc., under Jamie Kellner, were somewhat distant siblings, separately pursuing their own programming agendas.

Now with both companies united under Bewkes's watch — as head of the newly created Entertainment and Networks Group, along with movie studios Warner Bros. and New Line Cinema and record label Warner Music — some industry observers have speculated that both cable-network entities could butt heads under the new arrangement.

"Both HBO and TBS Inc. have pretty much been able to remain independent in terms of developing their own identities," said one industry executive who wished to remain anonymous. "It'll be interesting to see whether they're willing to make the necessary adjustments to fit into the new corporate structure."

But HBO's new CEO, Chris Albrecht, believes the networks can coexist peacefully under Bewkes's leadership.

"Jeff is the consummate leader and executive and he's as talented on the creative side as he is on the financial side," he said. "I think people are glad to see him there.

"Jeff will dive into the work of helping AOL Time Warner get back to the place it deserves to be."

KELLNER: ON BOARD

Much of the speculation concerning any rifts within the division has been focused on Bewkes and Kellner, who was a close ally of departing AOL chief operating officer Robert Pittman. Kellner, who was brought in last year to oversee Turner's cable franchises — including Cable News Network, Turner Network Television, TBS Superstation and Cartoon Network — will now report to Bewkes, who prior to the restructuring was his equal as head of HBO.

But Kellner last week doused rumors that he was unhappy with the new entertainment structure and planned to leave the company, or that he feared he would be driven out because of his alliances with Pittman.

Kellner has roughly two years left on his TBS contract and said he will live up to his obligations.

He added that he had no interest in the AOL corporate position, and actually suggested Bewkes for the job to AOL Time Warner CEO Dick Parsons.

"Jeff and I go back a long way, and I told [Parsons] that Bewkes was one of the underutilized talents in the company, so I'm totally on board and fully supportive," Kellner said.

Still, it remains to be seen how well the two executives will work together, given their seemingly divergent network-programming philosophies.

Bewkes turned HBO around by transforming it from a theatrical-driven network to an original-programming juggernaut, garnering both critical and viewership accolades for such series as The Sopranos, Sex In The City
and Six Feet Under.
Kellner, on the other hand, has relied less on original fare and more on acquired movies and top off-network series to help build general-entertainment networks Turner Network Television and TBS Superstation.

Kellner, though, believes both networks are on the right track and doesn't expect to make any major near-term changes.

FEW CHANGES

"I don't think you'll see any changes beyond what TBS and TNT currently have," he said. "There's a certain amount of original programming on now, and we've always wanted to put more on. It comes down to the advertising recession — you can't do all the things you can in a healthy advertising market."

Bewkes, who could not be reached for comment last week, is also expected to better develop alliances between the various companies, which could open up numerous shared programming opportunities, including the possibility of a distribution window for HBO product on either TNT or TBS.

Kellner, a proponent of repurposing, has already teamed with broadcast network The WB to air episodes of Charmed
a week after their over-the-air debut. While talk of such deals between Turner and HBO is "premature" today, Kellner said it could become reality in the future.

"I think all parts of the company are focused on how we can exploit the programming and best serve the customer better," he said.

Added Albrecht: "The intent is to find sensible ways that can provide revenue for [AOL Time Warner], but benefits the division. If that's something that ends up being discussed, then we'll be at the table discussing it."

HBO: STAYING ON TOP

For HBO, the challenge is to remain arguably the pre-eminent purveyor of original programming in cable. Albrecht, formerly president of HBO Original programming, will remain as active in developing new series and specials for the network in his new role as CEO.

He said he'll lean heavily on new network COO Bill Nelson and a veteran executive staff, almost all of whom have toiled with Bewkes for more than 15 years.

Nelson, formerly HBO's executive vice president in charge of finance, information and operations technology and business affairs, said the network will focus on expanding the brand by taking advantage of new windows for its popular original shows. He's particularly bullish on the revenue opportunities derived from the network's video-on-demand service, currently being tested in several systems.

"We are the best-positioned [network] to take advantage of the new technologies that allow us to deliver the breadth and quality of the programming to the consumer on an on-demand basis," Nelson said.

On the programming side, Albrecht said the network will continue to develop original series and at least four to six original movies a year.

HBO could also look to expand its brand to theatrical movie releases, including a possible The Sopranos
film, once the series ends its run on the network next season.

"The other challenge is to make sure the HBO brand name is at the forefront of new revenue streams, whether it's VOD or home video, and that the quality of the efforts in those areas is as high as the effort on the cable network," he said.

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