Time Warner‘s CEO says he’d be open to helping a broadband-only product from a cable company because it would protect HBO‘s relationship with the biggest source of the premium channel’s customers. “Distributors are competing more,” Jeff Bewkes told investors at the Goldman Sachs Communacopia Conference in NYC. A cable-provided broadband arrangement with HBO “will make it an offer you can’t refuse. … We see growth there for HBO in that.” The exec still doesn’t like the idea of offering the premium channel on broadband to people who don’t also deal with a pay TV provider. As many as 10M homes receive Internet service without cable or satellite, he says. “If you take out old people, it’s probably 5M or 6M.” But people in about 70M homes subscribe to pay TV but not HBO. “We’re working more on that.” Bewkes also provided the most vigorous response I’ve heard so far by a programming exec at the confab to questions about whether their price increases might drive the pay TV business off a cliff by making it too expensive for consumers.
He promised investors that his Turner networks will see double-digit annual growth each year from affiliate fees through 2016. “We have more density of must-have networks than anybody else. … We don’t have any weak brother/sister networks to be used as hostage.” More broadly, Bewkes says that the number of people spending extra for premium channels is growing while distributors who offer low-priced packages find that “almost no one buys them.” He adds that many consumers think nothing about buying Starbucks coffee. “You paid more for that than you paid for the best TV for your entire family on God knows how many devices. It’s $3 a day. You don’t think that’s a deal?” He also chided distributors who say that they’re groaning under the pressure of rising programming prices. “If you look at their earnings, you know that they have a healthy business.”
Bewkes doubts that they’ll face serious competition from companies such as Intel and Sony that are exploring the possibility of offering a cable-like programming package via broadband. Time Warner is “open to it”. But if these businesses took off, “you have a question about the quality of the broadband plant, [their] viability, and advertising measurement.” He’d also expect cable companies to respond by making heavy broadband users pay higher rates, instead of charging single monthly price for nearly unlimited downloads. Bewkes remains enthusiastic about additional streaming for TV Everywhere, which offers programming online to pay TV subscribers. Unlike many programmers, he doesn’t want distributors to pay an additional fee just for the digital rights. That could slow down the rollout of the system that he says is essential for pay TV’s future. “It’s the only way to make a revolution in consumer usage.”