Bewkes: Despite Online Growth, Pay TV Still Thrives

Time Warner Chief Says Rising Penetration, Viewing Hours Point to Strength of Bundle

Time Warner Inc. chairman and CEO Jeff Bewkes said that fears that the rising cost of pay TV would price a growing number of consumers out of the multichannel universe have proven unwarranted, adding at an industry conference that the ay TV bundle is more attractive now than it has ever been.

“We don’t think the multichannel bundle is becoming less of a good deal, we think it’s getting to be a better deal and we think it’s getting to be a better deal in the opinion of consumers,” Bewkes said at the Deutsche Bank Media, Internet and Telecom conference in Palm Beach. Fla., Monday.

Bewkes said the relative lack of cord-cutting, rising penetration rates for pay TV, increased viewing hours for consumers and the increase of quality programming across a wide range of networks all back up that claim.

As far as online services taking share, Bewkes pointed to Netflix, adding that the streaming pioneer went from zero to 27 million subscribers and had no effect on multichannel penetration rates. While he didn’t want to seem insensitive, Bewkes added that the evidence shows that price doesn’t seem to be as important as quality and choice.

“If the price is too high you would expect to see people revolting in some way; you would expect them to be cutting their packages,” Bewkes said. “And yet if you look at the low-priced offerings that Dish [Network] offers, that Time Warner [Cable] Essentials [offers] – these are all economy packages – nobody buys them.”

Bewkes said that Netflix’s recent move toward buying original series is a step in the right direction, but added they couldn’t afford to be a real player in the scripted series arena.

“They can’t afford to buy all the major live programming or syndicated non-serialized series that are going to NBC, CBS, TNT and so forth; the programming budgets for those guys are massively larger than the SVOD guys,” Bewkes said. “But it’s shaking out really well. They’re coming in for the things they ought to do, which is library and serialized [content] and they’re fitting in mainly as a compliment to other networks. A lot of people that have HBO have Showtime and a lot of people who have Netflix have HBO and vice versa.”

But Bewkes would not rule out selling programming to over-the-top services like Netflix.

“We all have to look at these new distribution methods as whether they’re viable; whether they offer consumers a better experience at a lower pirce, whatever it would be to make them viable,” Bewkes said. “No one’s come along with that yet. We will look at it. It would have to be accretive and once we figure out all the ramifications. But nobody’s done it yet.”

Bewkes seemed to draw the line at selling its own original shows to competitors though. He added that networks like Showtime and others probably wouldn’t be able to pay the price HBO would ask and that the subscription service derives even more value from exclusive shows through subscriber retention and growth.