Time Warner paid $583 million for its 10% stake in Hulu, an arrangement that “fits our strategy like a glove,” CEO Jeff Bewkes told analysts in a call to discuss Q2 earnings.
The deal “leaves us free to support fully other traditional and broadband-delivered distribution platforms,” he says. And he expects that “there’ll be a number of additional virtual [pay TV] services” that will be “great for consumers and for our industry-leading brands.”
Time Warner won’t have a board seat or direct Hulu’s plans. That “reduces complications around governance,” Bewkes says.
HBO chief Richard Plepler says he’s having “constructive conversations” about the possibility of also offering the premium channel via Hulu.
When Hulu launches its streamed live TV service next year, the Turner networks it will carry will be paid much like they are at Dish Network’s Sling TV and Sony’s PlayStation Vue.
It declined to say whether the arrangement includes mobile rights, and how much it expects to make. But Turner chief John Martin said that analysts should assume that the deal, like with the Sling one, has “similar rate card assumptions” and annual price increases as agreements with cable and satellite companies.
On other matters, Time Warner says that the Turner networks saw a 2% average decline in subscriptions and assumes that pace will continue.
In the just-completed upfront market the ad-supported entertainment networks saw “strong double digit” increases for the prices charged to reach each 1,000 viewers.
Early results from its reduction in ads in certain shows — ahead of a planned cut at networks including TNT and truTV — are “quite encouraging,” and contributed to the strong upfront sales, Martin says.
“We’re seeing smaller drop-off during ad pods…which means higher ratings to the network” as well as greater consumer recall of the products being sold. “We’re working very very hard to make the ads more relevant and contextual with the content itself.”
Bewkes also says that CNN is undergoing “nothing short of a renaissance” as it “continues to gain momentum and take share” during the election year.
Warner Bros chief Kevin Tsujihara told analysts not to read too much into his recent decision to sell Chuck Lorre’s upcoming multi-camera comedy Disjointed to Netflix, as opposed to a traditional network. The subject matter — about a woman who runs an L.A.-area cannabis dispensary — “didn’t lend itself to advertiser friendly networks,” he says.
Asked about industry-wide movie trends, he says that “the big franchises mean more than ever” as the top six films account for about 35% of domestic box office.
And scale matters for a studio, as long as it provides franchises: “I don’t think you would need to see consolidation with players who don’t have intellectual property merging with other players who don’t have intellectual property. What you really need are the big franchises that will drive the economics, which is what our strategy is based on.”
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