Netflix, Redbox Could See Higher Rates, Different Windows for Warner Content

Warner Bros. Pictures isn’t getting enough value from Netflix and Redbox, and it’s time to take a look at arrangements with the low-price DVD and Blu-ray rental businesses, Time Warner’s CEO said Wednesday.

Warner Bros. already imposes a 28-day delay in releasing DVDs and Blu-rays to those platforms, and Time Warner CEO Jeffrey Bewkes said on the company’s Q4 earnings call that having the window is better than not. “It’s getting kind of clear that the acceleration in consumer usage of these kinds of services … makes it a good time for us to reevaluate the terms,” he said. “We can’t be more specific at this time. We just think the value that our film company should get for that period of exhibition is considerably higher than what’s there now,” he said. Netflix and Redbox didn’t immediately respond to our queries.

Meanwhile, Time Warner has taken steps to increase its programming distribution on new platforms, Bewkes said, pointing to this week’s announcement with Comcast about putting more shows on the Internet and on Internet-connected devices. TV Everywhere deals like the one that Comcast and Time Warner reached will increase the value of syndicated TV programs, because soon consumers will be able to watch the shows on additional devices. But media companies should limit the number of episodes of each program that they make available on the new platforms, he said. “We think if it’s on a network, it ought to be there for you to watch on demand,” but only the most recent four to six episodes, on a rolling basis, he said. Time Warner can already offer that to Turner’s distributors for shows the studio produces, but it has to acquire those rights for shows produced by other studios, he said.

Time Warner has no plans to offer HBO directly to consumers or go over-the-top of traditional pay-TV operators very soon, Bewkes said. “We do have the ability to do that, but it’s not something we're about to do today,” he said. HBO’s relationship with distributors is valuable, and distributors handle most marketing, customer service and infrastructure costs, Bewkes said. “These are not small items, and I think everyone has to think carefully about what is needed to maintain the broadband infrastructure to deliver video,” he said.

Time Warner’s games business should improve in 2011 with new titles such as Batman, Arkham City expected to lift results, CFO John Martin said. Overall sales at Time Warner during the quarter increased 8.3 percent from a year earlier to $7.8 billion. Revenue at its pay-TV networks gained 14 percent to $3.3 billion, reflecting a 21 percent increase in subscription revenue to $191 million and a 25 percent gain in ad sales. Total company profit rose 21 percent to $766 million.