Time Warner CEO Jeff Bewkes Talks AT&T Deal, HBO's International Plans
The executive who oversees Warner Bros., HBO and Turner said his company is at work on integration plans for its $85.4 billion sale to AT&T so that they can "hit the ground running" after the deal closes.
Time Warner is still waiting for its $85.4 billion sale to AT&T to pass regulatory review, but CEO Jeff Bewkes said the upcoming deal has "not been distracting" to his portfolio of brands that includes HBO, Turner and Warner Bros.
Bewkes, as part of remarks made to investors at Deutsche Bank's annual Media & Telecom Conference in Palm Beach, Fla., elaborated on his plans for the deal, which was first announced last October, noting that it will "accelerate innovation for the consumers." He pointed to AT&T distribution via subscription business DirecTV and its mobile customer base and explained that combining those resources with Time Warner's TV brands and film studio creates "a very interesting set of capabilities."
But although the deal has yet to close, Bewkes said integration planning is already in the works so that the companies "can hit the ground running." Meanwhile, he doesn't expect many changes at the businesses that he has led as CEO since 2008, reminding the audience that Time Warner has announced an acceleration "in a lot of our activities" this year.
At Turner, home to CNN, TBS and other cable networks, he said that the existing ecosystem will remain a business driver, but added that he expects "a bigger variety" of skinny bundles and cable packages including genre-focused packages based on sports. Meanwhile, Turner and HBO have both placed an emphasis on building out their digital distribution, including short-form platforms Great Big Story from CNN and Super Deluxe from Turner.
The launch of over-the-top streaming service HBO Now in 2015 was one of Time Warner's biggest bets on the future of how people will want to watch television. Asked about the service's international business, Bewkes said "it's going very well." He noted that after fixing some initial technical glitches in the Nordic countries, that service has seen accelerated growth. HBO Now has also expanded into Spain. In regions where HBO Now isn't available, the premium cable channel has been aggressive about selling its programming to local distributors, which Bewkes pointed out often want the programs for their local VOD offerings. SVOD licensing, he added, is "not just a discrete set of windows or rights. It can motivate a bid from a traditional first-run television distributor, also. You end up basically having more demand for hit shows because of more volume crowding out less successful networks and shows."
Even though Bewkes touted Time Warner's digital efforts as being far ahead of some of its competitors, he made it clear that he's still very bullish on the television model. "The returns on TV series production are fantastic, better than theatrical," he said, explaining that the advent of new streaming services has increased demand. "That's a good thing."
Bewkes is similarly optimistic about the future of Time Warner's movie business via Warner Bros. Theatrical, he said, "will be one of our leading growth segments at Warners this year." He pointed to the recent release of Lego Batman, which has made nearly $258 million since hitting theaters according to Box Office Mojo, as well as upcoming superhero titles Justice League and Wonder Woman. Bewkes also predicted that Christopher Nolan's World War II film, Dunkirk, "is going to be just a great movie this summer."
Time Warner in February reported fourth-quarter earnings of $1.25 per share and revenue of $7.89 billion, up 11 percent from the same period last year.