Time Warner CEO: Netflix Deal Affecting Nickelodeon Ratings

While Viacom management has said that ratings at its Nickelodeon kids network have not been affected by a content deal with Netflix, Time Warner chairman and CEO Jeff Bewkes on Wednesday told analysts that digital licensing deals do take part of the kids audience away.

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Subscription VOD deals make sense for older content, but too much exposure on digital platforms can backfire, he said on his company's first-quarter earnings conference call. "Obviously that's taking some viewing away," Bewkes said.

TW's Cartoon Network saw a 14 percent ratings gain in the latest period. "We think part of the reason is that we don't have our shows spinning" on Netflix or other subscription VOD services.

Management said it will remain focused on licensing older library and serialized drama content, for which traditional syndication is less lucrative, to digital players. TW expects to book about $200 million in subscription VOD revenue this year, CFO John Martin said.

Bewkes cited the CW's Netflix pact as an example where a digital content deal made sense. That content had a "more efficient and higher value" in subscription VOD than TW and co-owner CBS Corp. thought would have gotten in the traditional environment, he said.

Discussing Hulu, Bewkes said its reported move towards authenticating that users are pay TV subscribers "makes sense." He added: "Hulu is moving in the right direction now," and the move may be "useful" to keep it viable.

Meanwhile, HBO is looking to significantly increase its output of original series, Bewkes said.
Could this also mean that HBO could drop a studio output deal? Bewkes said his conglomerate has "the luxury of choice," and "we are going to evaluate that ... Originals fuel the worldwide business."

HBO has film deals with TW's own Warner Bros. and the likes of Fox, Universal and Summit Entertainment.

Asked if TW could sell content to a virtual multi-channel service operator, or a digital cable operator of sorts, if one launched in the future as many predict, Bewkes said it depends on the money they pay and their offers for consumers.

Bewkes also lauded UltraViolet for a good start. He cited more than 2 million accounts created to-date, with 1 million of them having been started in just the past month.

Bewkes also predicted "pretty good" upfront advertising sales. "We'll get our fair share or more," he said about his TV networks group.