Three takeaways from the Time Warner earnings call
1. In making HBO Go available to Comcast for use in an offering aimed at broadband-only subscribers, Time Warner is only doing what it has done for 30 years — trying to broaden the channel’s appeal to a wide variety of people, said Jeff Bewkes, the conglomerate’s chairman. However, the endgame is something bigger.
“It could be an effective way to reach the 8 million or 10 million homes with broadband that don’t have multichannel TV. Great, we are interested we are supportive. [But] I think what we’ve all got to see is whether there is an interest — if there’s another as you mentioned — 60 million or 70 million basic TV subs, many of whom would like to have HBO … So HBO is working hard with some key distributors on that.”
2. The company is going all-in on original programming at TBS and TNT, as well as HBO, and trying to expand what consumers think of when they tune in to CNN. CFO John Martin says earnings growth will slow during the fourth quarter as marketing spending related to 80% new programming at Turner and HBO.
At CNN, where former NBC chieftain Jeff Zucker took over as president at the start of the year, morning ratings are up 30% over the third quarter of 2012 thanks to “New Day,” a program launched in June. “Anthony Bourdain: Parts Unknown” and filmmaker Morgan Spurlock‘s “Inside Man” reflect the network’s effort to rebrand itself in an environment where the success of highly partisan news channels like MSNBC and Fox News dominate the ratings. If it can’t stake out new ideological territory, it can offer quirky programs that are more like the fare that works for channels like Discovery.
“Programming investments such as these will likely put some pressure on CNN’s margins in the near-term,” Martin said, “but they will also open up a new pool of advertisers to CNN and they could position the network for a return to attractive growth over time.”
Bewkes added that CNN will increasingly capitalize on its solid position in the digital arena. According to comScore Media Metrix data for September 2013, CNN had 42.75 million unique visitors in September, reaching about 19% of the total Internet population for that month.
3. A 9% decline in home entertainment revenue at Warner Bros. reflected the shift of certain CW shows’ availability on SVOD to the fourth quarter this year, after being part of the third quarter a year ago. Also, Martin said, there has been some decline in demand for TV shows on DVD and Blu-ray, including catalog titles. The company did not disclose, of course, which shows disappointed.
However, electronic sell-through — or movies and TV shows that can be bought and downloaded via iTunes, Amazon and many other digital outlets — grew 50% across the industry, Martin noted. “We think that’s an extremely positive sign for the future of the home entertainment business, and we are focused on improving the consumer experience in order to further accelerate the shift to digital ownership,” the CFO said.
— David B. Wilkerson