Time Warner CEO Jeff Bewkes neatly summarized the company’s message to Wall Street today: “Just don’t worry.” But the analysts who attended today’s Investor Day event clearly have concerns about some of the just-announced initiatives — especially the plan to offer HBO programming to consumers who don’t subscribe to pay TV. Execs were short on specifics, and — their bad luck — made their sales pitch on the stock market’s worst day in years. Here’s what they said.
HBO’s Rich Plepler says — in response to a question — that HBO’s OTT initiative will begin by working with cable companies to go after 10M homes that just subscribe to broadband.
CEO Bewkes adds that cable operators won’t retaliate by dropping channels. “When you see what we’ve got on tap at Turner, that isn’t going to be a problem.” Turner’s John Martin says “maybe we can ride” on HBO’s back.
Tsujihara: Great content and great brands are going to win….and we have the best. Talent wants to work with the best.
Another analyst question about the HBO OTT initiative. Why will distributors go along? Plepler: Nobody’s doing us any favors selling HBO. We’re building businesses together…Discussed with everybody. I think they’re going to lean into having their broadband make money with us.
Plepler: Offering HBO shows on Amazon creates an appetite for HBO.
Another HBO OTT question: How do you keep people from downgrading service? Plepler: I don’t think it’s going to be cannibalizing… 85% of Netflix subscribers are pay TV subscribers. I don’t think this is either/or. …The great preponderance of this is additive.
Bewkes: We have some sympathy for the concern (about cannibalization)… OTT service could also be an outlet for Turner and Warner Bros. Multichannel is a huge value to people. …Online services such as Netflix have an extremely easy to use on demand capability. Time Warner has been lobbying for cable to offer the same with TV Everywhere. “The tech company world has turned it on faster and better….We challenge [cable operators] again today and invite them to do it. We’re saying today, we’re also going to do it.”
Question about Time Warner position on net neutrality in light of HBO online initiative. Plepler: The content in the HBO Go offering is what makes it so compelling and so dynamic. Bewkes: We all know that every night in the United States a big piece of the broadband capacity is being used by Netflix and YouTube. If that increases it will create strains….It has to be supported economically in some fashion. It’s more of an evolution than a revolution.
In response to a question about advertising, John Martin says metrics will change and daily overnight ratings will become less important. Also 90% of viewing is still within traditional TV ecosystem. He’s bullish about the future of advertising with technology and data.
Question to Martin about NBA deal. In next cycle of negotiations with pay TV distributors there’ll be a step up in prices.
Back to HBO OTT — will it partner with someone else to help roll out? Plepler: We’re looking at all options. There’s be no shortage of people who would want to partner.
Bewkes jokes that his message today is: just don’t worry.
They’re getting ready to wrap up. Bewkes: I hope you understood the tracks we’re laying for 2018 and on out. Plepler: Having the best programming doesn’t necessarily mean having the most expensive programming. Bewkes goes to podium to summarize message.
Bewkes: Can deliver a massive increase in value in this company. Time Warner deliberately stripped itself down to growth businesses. We are in the best position to capture that value. …We have very ambitious plans to make some global brands that are on a par with HBO, CNN, and Cartoon…Believes in TV ecosystem, but is willing to go outside. That’s us: We’re competitive. Has tried to be transparent. We feel great about it. We hope you join us. ….And that’s a wrap.