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Sure, Netflix may be enhancing its content deals and trading for over $200 a share — but it’s no real threat to major media companies, Time Warner CEO Jeff Bewkes argues.
“It’s a little bit like, is the Albanian army going to take over the world?” Bewkes tells the New York Times. “I don’t think so.”
Bewkes credits much of Netflix’s growth to a deal with Chris Albrecht-run Starz that expires next year. The partnership gave Netflix rights to stream the Sony and Disney movies from its network, which cut into the pay TV channel’s revenue. Netflix reportedly paid $25 million a year.
“Why should anyone subscribe to Starz when they can basically get the whole thing for about nothing?” Bewkes said, adding that it undermined the business model of cable television to collect subscription fees. “That doesn’t make much sense.”
Media analyst Michael Nathanson also called it “probably one of the dumbest deals ever. Starz gave up valuable content for tens of millions of dollars.”
Bewkes points to the media industry’s originally embrace of Netflix as a DVD rental outlet without foreseeing the company would eventually chip away at profitable DVD sales, which the industry has long counted on for revenue. Now Netflix is threatening to the same thing to cable television.
“Once you put it on Netflix, you really can’t sell it anywhere else,” said Bewkes, whose HBO is launching online service HBO GO for subscribers. The industry is also working together to launch TV Everywhere to give verified cable subscribers access to network programming.
“This has been an era of experimentation, and I think it’s coming to a close,” said Bewkes of Netflix.
At a UBS conference earlier this month, Bewkes called Netflix’s offer for $100,000 an episode of currently airing TV shows “measly.”
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