TW Could See More VoD Sales from Delayed Netflix Window

Time Warner’s deal with Netflix to put off the distributor’s access to DVDs until 28 days after they're released for sale has helped the cable programmer’s home entertainment business, CEO Jeff Bewkes said. Time Warner is seeing DVD sales for hit movies stronger and more sustained that first month than they were before the deal, he said. It also could increase VoD revenue through Time Warner’s pay-TV partners, Bewkes said. “You still have a fair amount of upside room for activity and effort” in marketing VoD to consumers and putting more content on that platform, he said. “We think this is working already, and it’s going to work better as we go along."

Time Warner’s HBO will be available to additional subscribers online within a year, Bewkes said. “You see it already with our biggest distributors like Verizon and Comcast,” where HBO is available on VoD and online, he said. “But soon you're going to see HBO on all our broadband devices” for pay-TV subscribers that take the premium service. For now, HBO’s broadband service will have more content available than its content partners will have on their VoD platforms, he said. That will change as distributors build out their VoD services, he said. The broadband service will also be limited to active HBO subscribers, Bewkes said. “You paid for it, and you should have it, and we're going to have our distributors who are very important partners in doing this be part of the equation,” he said. HBO could offer its online service separately sometime, but it’s not ready to do that, Bewkes said.

The programming Time Warner sells Netflix for its online streaming service is content that TW hasn’t been able to sell anywhere else, he said. Shows like Nip/Tuck that haven’t been picked up for syndication, and older movies, exemplify Warner Bros.’ contribution to Netflix streaming, he said.

Asked about the retransmission consent policy debate, Bewkes endorsed the broadcasters’ view. “We think on the whole it’s desirable” for broadcast networks to build up a second revenue stream, he said. It ensures that the networks will continue buying programming from Warner Bros., Bewkes said. “We're actually kind of happy if broadcasters revitalize their programming,” he said. “We have a very healthy business at Warner Brothers making TV series for the broadcast networks.” Time Warner’s cable networks rely on the popularity of broadcast programming to boost demand for shows in cable syndication, he said. “The successful shows that come off broadcast networks are then available for the leading cable networks like TNT and TBS, and they're a pretty important part of the ecosystem,” he said. “It is a very beneficial cycle for the industry and for us."

Time Warner Q2 sales gained 8 percent from a year earlier to $6.4 billion. Revenue at its cable networks rose 11 percent to $3.2 billion. Profit gained 7.2 percent to $562 million.