Warner Bros. CEO: DreamWorks Animation Sale Won't Cause "Significantly More Consolidation"

Kevin Tsujihara - H 2013
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Kevin Tsujihara - H 2013

Kevin Tsujihara says the studio feels "great" about its growth outlook and vows to continue focusing on reducing costs, while Time Warner executives also predict a strong upfront and discuss a possible cable-style Hulu service.

Will NBCUniversal's $3.8 billion deal for DreamWorks Animation lead to a major round of studio consolidation?

Warner Bros. CEO Kevin Tsujihara answered the question on Time Warner's first-quarter earnings conference call on Wednesday. "I don’t think you [will] see significantly more consolidation," he said.

He highlighted that big franchises are "more valuable than ever," but added that there are not "a lot of those" available right now, concluding: "I don't think that that's going to be kind of a precursor to a lot of transactions."

Viacom continues its process of selling a minority stake in its Paramount Pictures, but industry watchers see that as a special situation that won't lead to a change in control of the studio. Much industry chatter has therefore focused on Lionsgate, the last publicly traded studio, which earlier this year said it was considering a deal with premium TV company Starz. Liberty Media chairman John Malone owns stakes in both companies, but sources have said discussions have so far not led to any deal, with stock price movements among the issues that have complicated things.

Tsujihara on Wednesday also emphasized his bullishness for Warner Bros. "We feel great about the long-term growth" outlook, he said on the Time Warner earnings call, touting its film pipeline and strong TV production business. "And we’re going to continue to focus on margins," he added, saying "we have done a very good job in reducing costs, but we think there is still work to do." The exec concluded that his team felt "really good" about the long-term growth outlook for the studio.

Time Warner chairman and CEO Jeff Bewkes reiterated on the call that the company expects a big year from Warner Bros. After the recent release of Batman v. Superman: Dawn of Justice, key upcoming titles include Suicide Squad and Fantastic Beasts and Where to Find Them.

Management feels the DC Entertainment slate of films over the coming years will "captivate audiences worldwide for years to come," Bewkes said.

Asked whether Time Warner channels will be on Hulu if it launches an online pay TV bundle it is reportedly considering, Bewkes said: "We try to be available in all the packages consumers are interested in." He also argued that more VOD options are better for consumers.

Turner CEO John Martin said that "there [are] too many networks in the United States," predicting more smaller packages of "better networks" ahead. “That will be good for us," he said.

Martin also predicted the upcoming upfront advertising market would be the "best upfront we will have seen in years." 

HBO CEO Richard Plepler on Wednesday's call didn't update the user count for the HBO Now over-the-top service, but said the service started off the year with more growth, calling it "a good start" to 2016 that continues to leave management encouraged. As his team learns more about the service's appeal and its users, he predicted the firm would get only better at marketing it. In that context, Plepler also said that HBO Now subscribers are on average "a decade younger" than HBO's traditional subscribers.

Earlier in the year, Time Warner had said that HBO Now had ended 2015 with about 800,000 paying subscribers. HBO has since announced launch plans for the service in Brazil and Argentina, as well as Spain, which Bewkes highlighted again on Wednesday.