Time Warner's Jeff Bewkes Talks TV Ratings Decline, Dish's Charlie Ergen

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At an investor conference, the CEO also discusses his deal appetite and how HBO's online video service could be sold

At an investor conference on Tuesday, Time Warner chairman and CEO Jeff Bewkes discussed TV ratings declines, the shift of advertising dollars, carriage disputes and his appetite for deals.

"Charlie is always trying to help everybody," he said when asked about the recent and ongoing carriage dispute with Charlie Ergen's Dish Network. "He is a visionary." He said Ergen tried to figure out if a pay TV operator could offer a bundle of video services that people really want and can afford, which Bewkes said he himself appreciates.

Bewkes also lauded Ergen's business instincts for buying valuable spectrum, but didn't comment on the carriage talks in detail. The pay TV bundle is still very popular and successful, Bewkes also said Tuesday, saying he was sometimes surprised that some people wanted to move to a la carte pricing.

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‎Speaking at the 42nd annual UBS Global Media and Communications Conference in New York, Bewkes also reiterated that the company doesn't feel the need to do deals. "We don't have to buy anything," but the company looks at things that come up, he said. That allows the company to do deals based on their merits.

"We have sufficient scale," Bewkes said. "We are focused. We don’t want to lose that." He also said that if TW added more businesses, more networks that "aren’t as strong or must-carry as ours," that wouldn’t boost leverage but could potentially dilute strength and lead the company to lose focus.

The UBS analyst interviewing him had jokingly asked if Bewkes wanted to maybe acquire Fox, which led to the CEO discussing his take on dealmaking.

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Earlier in the conference day, James Murdoch, co-COO of 21st Century Fox, which had earlier this year offered to acquire Time Warner, spoke at the conference.

Discussing the "soft ratings across the dial" on TV, Bewkes said ratings measurement weaknesses likely account for a third to half of the audience decline. He said he didn't think that was part of a deeper "secular trend." Bewkes suggested that the young-skewing CW network would be up 10 percent in the ratings, instead of being down, if Nielsen's measurements were more precise. He said delayed viewing, SVOD audiences and more aren't being captured.

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Discussing HBO's plan to launch a broadband-only video service, Bewkes said 30 million pay TV homes have HBO. That means 70 million homes don't, including 10 million broadband-only households. He didn't detail how the company plans to reach those subscribers beyond talking in general terms.

One solution would be to see pay TV firms in coordination with Time Warner sell HBO on top of the pay TV firm's broadband service. The second option is to sell HBO via new distributors. The third option would be TW itself handling sales directly. He didn't say if that third option was likely to happen, but said it would mean TW could keep all the revenue, but would also add all sorts of costs. He explained that it would mean bringing in marketing, servicing and other work competencies or sourcing them from another company.

A source said TW is unlikely to pursue the third option for now. Wells Fargo analyst Marci Ryvicker said: "It sounds like a much lower margin proposition."

Will the new service, set to launch next year, be incremental or cannibalizing? Bewkes signaled several times that he doesn't expect it will eat into the existing pay TV eco-system. ''We just don't understand the question," he said a couple of times.

Bewkes also touted what he said would be "quite a strong film slate" in 2015, 2016 and beyond. Discussing J.K. Rowling's new films for Warner Bros., Bewkes said "even I was charmed" by some of the magical powers she mentioned in the Harry Potter books and films. Discussing superhero films that DC Entertainment has coming up, the CEO quipped to the audience: "I notice some of you are wearing tights and capes."

Bewkes also opened the lunchtime keynote appearance with some laughs, asking UBS analyst Doug Mitchelson to swap seats with him to get a better spot.

Email: Georg.Szalai@THR.com
Twitter: @georgszalai

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