Although the multichannel TV universe in the U.S. has been stagnant over the last couple of years, Time Warner sees growth.
Speaking at a Goldman Sachs investor conference, Jeff Bewkes, chairman and CEO of Time Warner, says "the recession has slowed things down." He notes that growth, in better times, had been at 1% or 2% per year. There are now around 90 million to 95 million TV homes connected to a multichannel TV service. TW still plans "to have wholesale [revenue] growth."
Bewkes says Time Warner is a fraction of the total wholesale cost that multichannel program
operators pay for TV networks. With upcoming increases in wholesale fees, he says those TV retailer operators "have got a lot of flexibility about where to put those charges."
Higher subscriber fees for TV networks will come from new deals -- especially for those that are deemed more valuable.
"Look at the top 40 channels," he says. "About 17% of TV viewing occurs outside of these 40 channels, and $7 billion [in affiliate fee/revenues] goes to those channels. Our wholesale charges are relatively modest." Bewkes says there will be a reallocation of money going to the channels that pull in more viewers.
TV advertising markets slowed in the third quarter because of the Olympics, he notes --although they have picked up a bit for the upcoming fourth quarter. "There is a little improvement there." But he says there is a long way to go, believing TV advertisers are waiting for new economic stimulus efforts in the U.S. and Europe to kick in.
He notes there continues to be a decline in DVD revenues -- but says new online products will convince consumers to buy. This includes new digital services from Flixster and new cloud-like, electronically connected DVD products, like Ultraviolet, which look to revive the business.
"The industry will continue to experiment with ways for electronic sell-through," he says, "so that ownership is worth something."