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Time Warner is focusing on strengthening the existing pay TV system, while at the same time reaching out to users outside the established eco-system, CFO Howard Averill said at an investor conference on Thursday. He also discussed the outlook for Warner Bros. and superhero movies.
Speaking at Nomura’s Media & Telecom Conference in New York in a session that was webcast, Averill said the company was “focusing on enhancing and strengthening the [pay TV] eco-system.” At the same time, “we want to really make sure and reach those consumers outside the eco-system.” He said the launch of streaming-only service HBO Now was the clearest such move to date.
“The priorities haven’t really changed,” he said about the conglomerate’s overall strategy. “But the pace of change has,” so the company feels it must move faster in some respects.
Averill said TW continues to expect to be able to have “industry-leading financial performance” and “grow at attractive levels” in 2016 and beyond.
Asked about the speed of pay TV subscriber losses, the CFO said the company has long assumed such losses and that trends were maybe moving a bit faster than people had at first believed, but there has been “nothing significantly different over the last several quarters.” He also argued that cord-cutting has not really accelerated.
“Smaller bundles are going to be more common,” Averill said. Larger networks are in a better position in that scenario, he added. “We have must-have content,” he said in arguing the company was well positioned.
Discussing the film business, Averill said “the industry is really doing well this year,” which bodes well for Warner Bros. He lauded a strong 2016 slate, including Batman vs. Superman and Suicide Squad. He said the unit would again have attractive growth next year.
“We just don’t see any evidence of that,” he said when asked about possible superhero fatigue. “You have to make good movies.” He said Warner’s slate has superhero films with different tones and sensitivities, which should help.
Averill on Thursday reiterated that HBO Now would lose money this year due to launch costs, but then be profitable after that. The profitability in 2016 will be driven by the number of subscribers the streaming service reaches, he said.
Averill also once again signaled previous management commentary that HBO would launch an over-the-top service in an international market soon, hinting that more markets could follow.
“We are in a really strong competitive position,” he said. “We are not in a position where we need to do anything.” He mentioned financial returns, strategic benefits and reasonable execution risk as key filters for deals, saying that makes big deals unlikely.
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