In the roiling landscape of online streaming, Time Warner plans to launch a premium VOD offering for its Warner Bros. films, while reassessing its agreements with Red Box and Netflix. CEO Jeff Bewkes said the VOD service will allow viewing of films 60 days after their release in the theater. Plans call for a second-quarter launch and distribution via all major distributors by the end of the year.
While that 60-day window goes into effect, Bewkes indicated that the company may lengthen the time before a film is available by Red Box and Netflix, while looking to charge each more for rights. "We're rethinking how much we extract from some of these new distribution channels," he said on an earnings call.
Currently, Time Warner has an agreement with Netflix, where it can offer its films 28 days after a DVD is released, but that time frame may be altered. "The acceleration in consumer usage of these kinds of services ... makes it a good time for us to re-evaluate the terms," Bewkes said. "And in our view, the current pricing and window are not really commensurate with the value with those kinds of availabilities."
With the new alternatives, Time Warner's HBO lost 1.6 million subscribers in 2010, although the company brushed that off as largely immaterial, since most of those subscribers were not providing any revenue.
Meanwhile, Bewkes reiterated that Time Warner is looking to jump-start a lagging home video business by pushing ahead with an UltraViolet technology for Warner Bros. films and TV shows. That allows owners of films to watch the content on multiple devices. Five other studios are also on board to deploy the technology.
Also on the digital front, Bewkes said Time Warner "TV Everywhere" content was available in 45 million homes at the end of 2010, and should expand to 70 million by the beginning of 2012.
On the revenue front, Time Inc. did have a 3% bump in ad dollars last year, but will look for more non-traditional streams in 2011, such as marketing services. Meredith has succeeded in that arena, and Time Inc. is now led by ex-Meredith executive Jack Griffin.
At its cable networks division, which includes CNN, TNT and TBS, total revenue in the fourth quarter rose 14% to $3.3 billion, on strong subscription fees and ad sales. Total fourth-quarter revenue rose 8% to $7.8 billion, besting analysts' average forecast of $7.47 billion, according to Thomson Reuters I/B/E/S.
Time Warner said the Turner networks continue to be growth drivers, although in ad sales mostly with the entertainment channels. In the fourth quarter of 2010, the CNN domestic group declined.
At Warner Bros.' TV production unit, Bewkes said a trickle-down effect from broadcasters collecting retrans-consent dollars is proving beneficial. Networks, in turn, are investing in programming, while cable networks' push into originals is also giving Warner Bros. increased demand. The studio plans to focus on development of new comedies this year.
For the full-year 2010, Time Warner overall posted a 6% revenue growth to $26.9 billion. Operating income was up 21% to $5.4 billion.
With the Time Inc. magazine division, Bewkes wants to move ahead with new flexible offerings for publications on tablets, such as single-copy purchasing; digital-only subscriptions; and dual print-digital subscriptions.