Time Warner CEO Defends Pay TV Bundle

2. Jeff Bewkes
Michael Loccisano/Getty Images

Chairman and CEO of Time Warner

From the Time Warner Center in Midtown Manhattan, Bewkes oversees Hollywood's most profitable studio, Warner Bros., which has scored with the Harry Potter juggernaut; cable networks including HBO, CNN, TNT and TBS; and increasingly digital magazines including Time, People and Sports Illustrated. Bewkes led Time Warner to $5.4 billion in operating profit last year, exceeded only by West Coast-based Disney.

After a big cable firm told a UBS investor conference that it may drop low-rated channels, Jeff Bewkes says the pay TV bundle is "economically efficient."

NEW YORK -- Time Warner chairman and CEO Jeff Bewkes defended the bundling of pay TV networks Tuesday, a day after Time Warner Cable CEO Glenn Britt said cable channel groups should expect that some of their low-rated networks might be dropped in the future.

During a lunch keynote appearance at the 40th annual UBS Global Media and Communications Conference in New York, he said, "I don't think it's desirable for consumers to break the bundle," which he described as "economically efficient." If groups of networks weren't bundled together, people would end up paying more for less, he said.

Bewkes described the escalation of sports rights costs as the main problem that causes financial pressure on pay TV operators. "The rest of the bundle is getting to be a better value," he said. "Its value will be going up."

The Time Warner boss reiterated Tuesday that he expects the conglomerate to get double-digit percentage gains in fees for carriage renewals over the 2013-16 time frame.

Arguing that pay TV distributors will need to decide who gets the money because they drive value, Bewkes said, "We think that is us."

Asked about weaker broadcast ratings this fall season, Bewkes said he was "not concerned" that the trend also would start affecting cable network ratings. Cable viewing "is continuing to increase -- some of it on platforms we don't see," he said. With TV network executives saying they don't get fully paid for viewership on new digital platforms, Bewkes argued though that advertisers are paying for audiences even if measurement systems haven’t fully caught up with changing viewing habits.

Discussing TW's overall financial outlook, Bewkes said the company has "a real opportunity to accelerate our growth." 

Email: Georg.Szalai@thr.com

Twitter: @georgszalai