Time Warner startled a lot of people recently when it allowed the No. 1 cable operator to include HBO Go in a new $40 a month broadband service. Wouldn’t some consumers cancel their pay TV service if they found that they can watch the channel’s shows without a subscription to basic cable? But CEO Jeff Bewkes says he isn’t worried. “It’s pretty limited,” he told analysts today in a conference call to discuss Q3 earnings. “It won’t be attractive to most people, but might appeal to a segment.” He wouldn’t discuss terms of the deal, or speculate about how many channels a broadband-only service could offer before programmers would demand that the carrier pick up all of them — basically, replicating the pay TV bundle. “It’s something we don’t have to be concerned about” just yet. “Of all the network groups, we have the highest proportion in the top 40” with 80% of the company’s cable network revenues coming from TNT, TBS, CNN and Cartoon Network. If a broadband provider tried to develop a best-of-cable package “our networks would be in there.” Meanwhile, Bewkes says that HBO’s having “a great year” with subscription growth.
But Time Warner warned analysts to brace themselves for the Q4 results: They’ll include big increases in programming expenses as the company pays for a big increase in original films at HBO, original episodes at Turner Broadcasting, and new programs at CNN that the company hopes will attract new advertisers who don’t typically associate themselves with breaking or political news. The company also says that its spin off of Time Inc now is expected in Q2, a delay from its plan in August to have it take place in early 2014.
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