Time Warner startled a lot of people recently when it allowed the No. 1 cable operator to include HBO Go in a new $40 a month broadband service. Wouldn’t some consumers cancel their pay TV service if they found that they can watch the channel’s shows without a subscription to basic cable? But CEO Jeff Bewkes says he isn’t worried. “It’s pretty limited,” he told analysts today in a conference call to discuss Q3 earnings. “It won’t be attractive to most people, but might appeal to a segment.” He wouldn’t discuss terms of the deal, or speculate about how many channels a broadband-only service could offer before programmers would demand that the carrier pick up all of them — basically, replicating the pay TV bundle. “It’s something we don’t have to be concerned about” just yet. “Of all the network groups, we have the highest proportion in the top 40″ with 80% of the company’s cable network revenues coming from TNT, TBS, CNN and Cartoon Network. If a broadband provider tried to develop a best-of-cable package “our networks would be in there.” Meanwhile, Bewkes says that HBO’s having “a great year” with subscription growth. READ MORE »
Time Warner‘s CEO says he’d be open to helping a broadband-only product from a cable company because it would protect HBO‘s relationship with the biggest source of the premium channel’s customers. “Distributors are competing more,” Jeff Bewkes told investors at the Goldman Sachs Communacopia Conference in NYC. A cable-provided broadband arrangement with HBO “will make it an offer you can’t refuse. … We see growth there for HBO in that.” The exec still doesn’t like the idea of offering the premium channel on broadband to people who don’t also deal with a pay TV provider. As many as 10M homes receive Internet service without cable or satellite, he says. “If you take out old people, it’s probably 5M or 6M.” But people in about 70M homes subscribe to pay TV but not HBO. “We’re working more on that.” Bewkes also provided the most vigorous response I’ve heard so far by a programming exec at the confab to questions about whether their price increases might drive the pay TV business off a cliff by making it too expensive for consumers.
CEO Jeff Bewkes must be glad that he only has to meet with ordinary shareholders once a year. Two dominated the Q&A session at today’s gathering with questions based on a view that Time Warner is engaged in campaigns to promote President Obama’s political fortunes, and gun control legislation. One found it suspicious that Michelle Obama awarded the Oscar for Best Picture, won by Warner Bros’ Argo. He noted that actor George Clooney — one of the film’s producers — had hosted fundraisers for the Obama campaign, and that the President and First Lady attended TNT’s annual Christmas In Washington special to raise money for the Children’s National Medical Center. “What a way to say ‘thank you’,” the shareholder said. Bewkes explained that the TNT show invites “sitting office holders that we have elected, whether wisely or not. They are not candidates.” As for the Oscar, “that’s done by the members of the Academy….That’s a whole forest if you wander into that.”
EXCLUSIVE: Warner Bros TV Shake-Up – Top Exec Bruce Rosenblum Settled Out And Peter Roth Signed To Big Long-Term Deal; All The Behind-The-Scenes Drama & Detail
UPDATE SUNDAY 2 PM: Warner Bros Entertainment CEO Kevin Tsujihara is finally confirming internally my news that Warner Bros Television Group Bruce Rosenblum is exiting. This, after Tsujihara for months and even in recent weeks has told almost everyone there that Rosenblum was staying.
BREAKING … SATURDAY 10 PM… EXCLUSIVE: Hollywood always fires people in success, or so the saying goes. I’ve learned that the announcement by Warner Bros Entertainment CEO (and soon-to-be-chairman) Kevin Tsujihara is planned for 7 to 14 days after next week’s TV upfront presentations. Despite Tsujihara’s claims for months that he hadn’t made up his mind what to do about the brilliant but sharp-elbowed Bruce Rosenblum, I can tell you Tsujihara declared from Day One of his new job that “Bruce is an unnecessary layer of management”. This, even though Rosenblum’s Warner Bros Television Group consistently contributes half of Warner Bros Entertainment’s profits year after year. I’m told that Rosenblum won’t be replaced as President of the Warner Bros Television Group now that he’s quietly settled out his contract which expires in August. (Tsujihara never made a move to negotiate a new one for him.) Some already expect Rosenblum not to turn up at next week’s upfronts. Instead Bruce is sitting on a fat severance package in recognition of his more than two outstanding decades at Warner Bros and for keeping his mouth shut during the humiliation of losing the WB CEO job and then getting kicked to the curb on top of that. Many in Hollywood thought Tsujihara might keep Rosenblum in place rather than bust up what is so obviously a winning formula atop the TV group. Instead Tsujihara proved that, just like his Time Warner boss Jeff Bewkes, he is more obsessed by politics and personality than profit. (“It would have been pretty awkward, quite frankly,” Tsujihara told the TV community about keeping Rosenblum on.)
Warner Bros Television President Peter Roth has just been signed to a new long-term deal and will report to Tsujihara for the first time. Roth reps the increasing power of content and the executives directly responsible for its creation. ”As I look at the key people that exist, Peter comes at the top of the list. He’s at the top of the game right now creatively,” Tsujihara enthused privately on Day One of his new job. But Rosenblum’s roles will be assumed by a new WBTV leadership mix including Warner Bros TV Group EVP Craig Hunegs, Warner Bros International Distribution President Jeffrey Schlesinger, and Warner Bros Television EVP Brett Paul. (“Peter is the big teddy bear but Brent was sent in to beat you up,” notes one exec.) These guys are some of what Bewkes was referring to back on January 28th when he talked about the “very strong benches of people beneath”. All will become the TV group’s new sharp-elbowed negotiators who won’t rub people the wrong way like Rosenblum did.
It’s been a professional and emotional roller-coaster for Rosenblum ever since he expected the top job and didn’t get it.
Listen to (and share) episode 34 of our audio podcast Deadline Big Media With David Lieberman as Deadline’s Executive Editor David Lieberman and host David Bloom look at out-of-whack CEO pay; a Washington threat to the Pay TV oligopoly; YouTube goes subscription with 30 new channels; and why Time-Warner’s Jeff Bewkes thinks blockbusters make sense financially.
“As a category more often than not you end up ahead” with the big-budget extravaganzas, the Time Warner CEO told investors today at the Jefferies Global Technology, Media and Telecom Conference. Despite the high costs, franchise properties are …
Jeff Bewkes doesn’t fear that his company will be squeezed by Netflix’s growing desire for exclusive programming — a potential issue at Viacom where Netflix says it won’t renew their broad licensing deal at the end of …
The proxy filed at the SEC this afternoon says that the CEO’s contract emphasizes long-term performance over year-to-year metrics. Still, Jeff Bewkes shouldn’t complain about his compensation for a year when Time Warner shares appreciated nearly 30%. His package includes $2M salary, $6.9M in stock awards, $3M in option awards, $13.6M in non-equity incentives, $219,560 change in pension value, and $167,943 in other compensation. Most of the “other” pay is for his personal use of the company aircraft. Time Warner says that “for security reasons” Bewkes was given a car and driver and “was encouraged to use Company aircraft for business and personal use.” Bewkes’ pay was 4.5 times higher than the median for his four closest colleagues, just a tad better than last year’s 4.6 times but still well over the line (3 times) that makes corporate governance watchdogs fear that a CEO wields too much power.
Time Warner’s talks with Meredith Corp about combining their magazines in a separate company collapsed today. But here’s Plan B for the media giant: It will spin off its publishing arm into an independent, publicly traded entity, likely by year end. Until recently, Time Warner execs scoffed when asked whether they’d consider mimicking News Corp, which is spinning off its newspaper assets. Now, though, Time Warner CEO Jeff Bewkes says the idea provides “strategic clarity” that will enable his company to “focus entirely on our television networks and film and TV production businesses.”
Don’t tell the Time Warner CEO that cable and satellite subscribers are fed up with rising prices, and tempted to replace them with some combination of free TV and Web services such as Netflix. Pay TV is “getting to be a better deal for consumers and a better deal in the opinion of consumers,” Jeff Bewkes told investors at the Deutsche Bank Media, Internet and Telecom conference. “Even in this recession, you don’t have cord cutting.” What’s more, TV viewing is up at a time when “you have increases in the quality and programming budgets of all these networks.” When companies including Time Warner Cable and Dish Network offer low priced packages with relatively few channels “nobody buys them.” And TV Everywhere will make consumers more attached to pay TV. “It’s all going on demand, on every Internet device you have for free because you have a subscription.” What if he’s wrong, and consumers want something cheaper? Time Warner will still be fine, Bewkes says. “We all know that the reason [prices are] up is the sports fee, it’s not anything else. Half of citizens don’t want that.” But 90% of his company’s affiliate fees come from four networks including TNT and TBS that are built around entertainment. If consumers want bundles without sports then “we’ll be in their bundles.” And low priced offerings would lower the threshold for subscribers to also subscribe to HBO. “That would be great for HBO,” Bewkes says.
UPDATED SHOCKER! Kevin Tsujihara To Become Warner Bros CEO; Bruce Rosenblum And Jeff Robinov Didn’t Find Out Until Late Last Week; “I’m Disappointed; Who Wouldn’t Be?” Rosenblum States; “Excellent Choice,” Robinov Says
2ND UPDATE (includes Robinov statement): Hollywood is stunned. Time Warner Chairman/CEO Jeff Bewkes just destabilized Warner Bros in a big way with today’s shockingly unexpected announcement that Kevin Tsujihara will take over Warner Bros on March 1st. I actually heard this two weeks ago from a source – and I didn’t believe it. That’s not a knock on Tsujihara’s ability. But no way Bewkes could ignore the fact that Bruce Rosenblum‘s Warner Bros Television Group accounts for 50% of overall Warner Bros revenues.* But Bewkes did. “Obviously, I’m disappointed; who wouldn’t be?” said Rosenblum, the TV president who was actively campaigning for the post, in a surprisingly candid statement. ”Warner Bros is a unique and special place and I know it will be in good hands with Kevin at the helm. I continue to be proud of our accomplishments and I have the most respect and admiration for our amazing team at the studio – a team that is thriving in an ever-transforming business.” Warner Bros Film Group topper Jeff Robinov at first remained silent and his office told Deadline it was “highly unlikely” he would have a statement. Now, one has been released – and it’s studiedly upbeat: “I am truly happy and proud of Kevin. We are both good friends and colleagues and I think he’s an excellent choice for the job. The Company will be in great shape under his leadership,” said Robinov. In fact, insiders tell me that Bewkes further humiliated Rosenblum and Robinov by not telling them about the choice of Tsujihara. I understand the duo had to hear about it at the last minute late last week from outgoing Barry Meyer.
[*Time Warner doesn't break out Warner Bros in its financial statements so that statistic may include Turner which doesn't report to Bruce. Warner Bros results are included in the 'Film And TV Entertainment' unit. It accounted for 40% of Time Warner revenues in the first 9 months of last year - $8.3B out of $20.6B - but just 17% of operating profit - $676M out of $3.9B. While Time Warner doesn't break out numbers for Warner Bros Television, it has revenues for "Theatrical Product" and "Television Product." Theatrical product accounted for $4B in the first 9 months ($1.4B from film rentals, $1.3B from home video and electronic delivery, $1.1B from TV licensing, and $127M from consumer products and other). Television product came to $3.4B ($2.6B from TV licensing, $617M from home video and electronic delivery, and $208M from consumer products and other).]
Here’s what Bewkes and Meyer said about their decision in a joint statement: “Given the talent, depth and strength of the Warner Bros’ leadership, selecting our next CEO was not a decision that could be made hastily or lightly. But we both agreed that Kevin is the right person to lead Warner Bros. and to build on its proud heritage as the world’s most storied content producer… In 2005, Kevin was appointed to head the then newly formed Home Entertainment Group, which he has skillfully led through a difficult transition and which remains number one in the industry by every measure. Just as importantly, he is a leading voice in creating and deploying new digital models to ensure that we remain market leaders. We’ve both been very impressed with Kevin’s strategic understanding and intuitive grasp of the evolution of the consumer’s interaction with our television shows, films and video games, and his ability to visualize how our products will be enjoyed in the future.” Warner Bros Home Entertainment’s division covers home video as well as the company’s wide ranging videogame properties and investments, digital distribution, anti-piracy, and emerging technology operations
Few thought Robinov was seriously in the running for the top job since he’d only taken over as film studio president in Spring 2011 from outgoing Alan Horn (now heading up Walt Disney Studios after Bewkes unceremoniously kicked him to the curb). But conventional wisdom was that Rosenblum, who took over the TV group in 2005 the same year that Tsujihara took over Home Entertainment, had a near lock on the job – especially if Bewkes decided not to go outside. And an appointment of Rosenblum would have continued Meyer’s TV leadership at Warner Bros and therefore not been questioned. Sounds to me like Meyer betrayed Rosenblum. Of course, Rosenblum still has an alternative power platform as Chairman of the Board of the Academy Of Television Arts & Sciences since November 2011. Robinov, meanwhile, has kept and is keeping his head down, immersed in developing powerhouse franchises like The Hobbit and perhaps Man Of Steel to replace Harry Potter and the most recent Batman trilogy.
Undoubtedly, Tsujihara’s new appointment will spark debate inside and outside Hollywood over whether Home Entertainment is most important to the future of Big Media. And whether content or platform/delivery should dominate. Of course, Bewkes could have (and in my opinion, should have) done nothing for several more years, and simply allowed his Warner Bros troika to coexist as equals. Now Bewkes, especially given the harshly crude way he handled this announcement, is risking the loss of two superlative executives. Keep tuned.
We’ll have to wait for Time Warner‘s SEC filing to see most of the terms. But the company announcement says there’ll be no change to Jeff Bewkes‘ base salary and bonus target, and that his annual long-term incentive awards will be “tied directly, and solely, to future financial and shareholder returns.” Since he became CEO in 2008, the value of Time Warner’s shares has declined 8.7% while the benchmark Standard & Poor’s 500 fell 6.5%. But over the last 12 months, the company is up nearly 36% while the S&P is +11%. Bewkes’ total compensation package came to about $26M in 2011 and in 2010. Here’s the release:
NEW YORK, November 20, 2012 – Time Warner Inc. today announced a new employment agreement with Chairman and Chief Executive Officer Jeff Bewkes, extending his term another five years through 2017.