Time Warner Inc. chairman and CEO Jeff Bewkes said the media giant will increase its investments in new digital products and infrastructure, building on its HBO Now and CNN’s Great Big Story online initiatives.
Time Warner launched HBO Now, its standalone online service in April. Last month, Turner and its 24-hour news network CNN announced a new social media delivered short form video network – Great Big Story – targeted at millennials.
“Having great content is no longer enough,” Bewkes said. “While we are living in the Golden Age of television programming, for many consumers, the television viewing experience is stuck in the Bronze Age.”
Time Warner said it is still in the middle of its budgeting process. But on a conference call with analysts to discuss third quarter results, chief financial officer Howard Averill said the investments could reach into the “hundreds of millions of dollars.”
Turner chairman and CEO John Martin said that investment will be “mostly outside of the programming arena,” focused on new business and building new brands like the Great Big Story initiative, its August purchase of a majority stake in streaming video pioneer iStreamPlanet and its recently resurrected internal comedy focused digital business Super Deluxe.
Bewkes also said Turner is rethinking the length of its subscription video on demand windows.
“Our company has led the industry in making our content available to consumers on an on-demand basis,” Bewkes said. “Due to ongoing shifts in consumer behavior, we think it’s important to provide even more on-demand content as part of our network offering. As a result, we’re evaluating whether to retain our rights for a longer period of time and, forego or delay certain content licensing. This would effectively push SVOD window for content on our networks to a multiyear period, more consistent with traditional syndication.”
The moves come after a mixed third quarter for the company. While earnings per share hit a record $1.25 per share, revenue rose 5% and adjusted operating income nearly tripled in the absence of one-time charges, affiliate fees declined and domestic advertising revenue was flat.
Total revenue was up 5% to $6.6 billion at the media giant, driven mainly by its Warner Bros. film unit and Home Box Office. But affiliate fees at its Turner Broadcasting unit were down 1%, compared to consensus estimates of 2% growth.
“It looks to us like the see-saw ride in media investor sentiment just got another jolt of cord-cutting fears,” wrote Sanford Bernstein media analyst Todd Juenger in a note to clients.