Warner Bros. will have “another record year” in 2016 — but this time led by the performance of theatrical films as opposed to TV and video games — Time Warner CEO Jeff Bewkes told the Deutsche Bank Media, Internet and Telecom Conference today.
“We’ve got a big slate of new franchise films coming out and, as we all have seen, big tentpole global franchises have a bigger share of box office,” he says.
He’s bullish about releases tied to his company’s DC Comics, including Batman Vs. Superman and Suicide Squad. In addition he cited Fantastic Beasts and Where To Find Them from Harry Potter author J. K. Rowling, The Conjuring 2, and an animated feature Storks.
Along with the movies, Warner Bros will produce 450 hours of TV series for Cartoon Network and Boomerang. That “not only fuels those networks globally, not just in the States, it also supports the characters, and the product sales.”
The studio is counting on having film and TV hits in part because the video game business may not match its 2015 performance. “We had a huge year last year,” Bewkes says. “I don’t know if we can do that again.”
The CEO tried to reassure investors that Time Warner’s main business — its television networks — are in good shape, despite their concerns about declining subscribers and ratings. Time Warner shares have lost 18.5% of their value over the last 12 months.
Bewkes seems especially upbeat about HBO, the unit he once ran.
Although revenue growth decelerated in 2015, “that’s actually a good thing,” he says: Most of the growth occurred “in the [pay TV] affiliates where we had incentive performance structures that they took advantage of — which proved to them and everybody that you can get subs…All of those deals are in constant evolution, Most of them roll over this year or next year.”
He says that the HBO Now streaming service has “nearly 1 million subs.” And at a time when about half of TV users subscribe to a subscription VOD service such as Netflix, “there’s no reason why they shouldn’t all have HBO.”
But he’s most interested in raising subscriptions among the 70 million pay TV subscribers that don’t buy HBO. Some distributors “perform quite badly,” he says. When that happens, customers can buy the online product.
“We don’t care which one it is. We haven’t used broadband to undercut retail,” Bewkes says. “But we have the flexibility to optimize that from a wholesale structure.”
Asked whether the $15 a month price for HBO Now is too high, the CEO says that “we’re not trying to pursue the lower priced strategy that some of the syndication VOD services have. So far it’s working very well as an additive thing” — with no cannibalization of the pay TV service.
He adds, though, that “if we think it would be optimized with different packaging or pricing, we can pursue that.”
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