The Time Warner CEO benefited from a new contract that took effect last year and the board’s conclusion that he “has been highly effective and successful” in a year when the share price appreciated 46%. Jeff Bewkes‘ 2013 package included: $2M salary, $8.2M stock awards, $7.8M option awards, $14.4M non equity incentives, and $126,889 in other compensation. The “other” category includes $55,191 for Bewkes’ personal use of the company plane as well as payments for car and driver and reimbursement for financial advisory services. The Time Warner board treats Bewkes like a rock star in comparison with other execs: His compensation accounts for 53% of the total paid to the top five officers, up from 48% last year. He made 5.5 times the median for his four top lieutenants, up from 4.5 times last year. Corporate governance watchdogs often become concerned that a CEO’s pay is out-of-whack when he or she makes more than three times the median for the others. Time Warner will hold its annual meeting in Burbank on June 13.
Time Warner‘s premium channel is approaching the point where a change would pay off, but there’s no need to hurry, according to data from an online survey of 2,501 adults out today from Morgan Stanley’s Benjamin Swinburne. Some 44% of broadband-only …
In this week’s podcast, Deadline’s executive editor David Lieberman and host David Bloom look at the Obama administration’s unusual intercession in the Aereo Supreme Court case on behalf of the networks and the notable absence of tech industry involvement in the case so far.
They also try to make sense of John Malone’s latest complicated stock shuffle that affects SiriusXM and Charter Communications; check in on the many Big Media highlights from this week’s Deutsche Bank investor conference; break out the checkbook for that Amazon Prime price hike; and wonder how DreamWorks Interactive can be on track for both a $310 million global box office haul for Mr. Peabody & Shermanand a write-down of $84 million for that same film.
“We’re all in the process — and Warner Bros is in the center of it — of figuring out how to license and expose programming” over multiple platforms, the Time Warner CEO says. “The economics have to adjust.” But Jeff Bewkes told the Deutsche Bank Annual Media, Internet & Telecom Conference that he expects little or no cannibalization as TV shows move from networks to cable VOD and online services including Netflix, as well as traditional syndication. “Your interest may go up, not down. We’ve seen a lot of that at HBO….There’s a lot of repeat viewing.” Some analysts are beginning to wonder whether services such as Netflix and Amazon Prime — which thrive from their ability to show TV reruns — might suffer as programmers let cable companies offer episodes almost immediately after they first air on ad-supported VOD where fast-forwarding is disabled. But Bewkes says that TV viewing “will go up dramatically because there’ll be more opportunities for you to see it.…TV will become more accessible and you’ll still have your [online subscription VOD] backup service. It’s like a sandwich. Eat it while it’s hot.”
In this week’s podcast, Deadline’s executive editor David Lieberman and host David Bloom look at CBS’ new Thursday night football deal with the NFL; Twitter’s complexity issue with newbies, and Disney’s red-hot quarter fueled by Thor and new franchise Frozen. They’ll also take a gander at those newly available HBO financial details and how they stack up against Netflix, even as Time Inc. braces for layoffs after its imminent spinoff; and question whether Microsoft’s new boss will be much different from the old boss, particularly with the company’s first boss as his new technology adviser.
The company didn’t make a direct connection to Netflix — but the comparisons, especially in profitability (see chart below), become irresistible now that Time Warner reports results for HBO, previously lumped with Turner networks. This morning’s numbers scratch the surface; other filings should tell us much more. The company intends to take advantage of HBO’s financial firepower: HBO will increase spending and hours for original series in 2014, CEO Jeff Bewkes told analysts. Much of the spending will boost Cinemax, which he calls “an under-appreciated asset” with more viewers than Starz and about about the same as Showtime. HBO, the channel, accounts for about two-third of the operation’s 45M domestic and 85M overseas subs. Execs also noted that subs are growing at a healthy pace, with domestic up by 2M in 2013. International revenues account for 25% of the unit’s total — a number that’s expected to grow. Bewkes says that Netflix, Amazon and Hulu have had “no discernible effect” on HBO so far.
Here’s how HBO and Netflix compare on the top and bottom lines:
CEO Joe Ripp doesn’t say in his memo to staffers today how many people will be affected by his effort to, as he put it, “right-size the organization” — although the total is expected to be in the hundreds. The job cuts are at least partly designed to make the company more attractive to Wall Street when Time Warner spins off its publishing arm, expected by mid-year. Its success “will depend on how investors view the momentum we are generating at the new Time Inc,” he says. That requires “some substantive and sometimes painful changes to the way we operate and approach our business.” Employees will learn “as early as today” who’s getting the ax. He unveiled plans to restructure the organization, ditching its three brand operating clusters. EVP and longtime Time Inc vet David Geithner – who’s former Treasury Secretary Tim Geithner’s brother, and runs the Style & Entertainment Group — will be out. Former Dow Jones exec Todd Larsen will take charge of the company’s most famous titles including People, Entertainment Weekly, Time, Sports Illustrated and Fortune. Evelyn Webster, currently president of the Lifestyle group, will continue to manage publications including Cooking Light, InStyle, and Real Simple. Ed Kelley, who ran American Express Publishing before Time Inc bought it last year, also is leaving.
It’s a big week for media companies and real estate. Yesterday Comcast announced a plan to build a $1.2B corporate campus in Philadelphia. Now Time Warner says that Related Companies, an entity owned by the Abu Dhabi Investment Authority, and GIC ponied up slightly more for the Time …
Outside of Comcast and Verizon, cable and satellite companies “haven’t moved fast enough or effectively enough” to offer video on demand to their subscribers, the Time Warner CEO told the UBS Global Media and Communications Conference. Distributors have the rights to offer shows on VOD, and audiences want it. “If you think about the success of things like Netflix, the interest YouTube – it’s mostly because you can get your stuff on demand.” It’s “a gigantic opportunity” for pay TV. But “there’s very spotty performance among distributors on how these tremendous VOD rights are conveyed to you.” if distributors don’t move more quickly then the demand “is going to be filled by somebody else” — probably a tech company. That would be “a missed opportunity….It’s not going to serve consumers as well and won’t serve the broadband plant” or programming diversity. He seemed uncertain, though, that someone will soon offer an online pay TV service that would compete directly with cable and satellite — which became a big issue here yesterday when Viacom CEO Philippe Dauman said he believes an over-the-top competitor will launch in 2014. “We’re all open to it,” Bewkes says. “The question for consumers and rights providers is: What service do they provide?” He also wonders whether the Internet infrastructure can handle the additional bandwidth demands for video. “That’s an open question.”
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.
NEW YORK, NY – November 4, 2013 – Time Warner Inc. Chairman and CEO Jeff Bewkes today announced that Karen Magee has been elevated to Executive Vice President, Chief Human Resources Officer. Ms. Magee will report to Mr. Bewkes and will be responsible for the company’s human resources strategy including global compensation and benefits, global organizational and leadership development, worldwide recruitment and executive search, and diversity.
In announcing Ms. Magee’s promotion Jeff Bewkes said: “Over the last several years Karen has provided results-oriented leadership in human resources, working with our top executives across the business units to better define, measure and achieve success. Karen’s efforts have helped to create a workplace environment that attracts and motivates high-caliber talent, which in turn enables us to develop and distribute great television, film and journalism content that is valued by audiences worldwide.”
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.
Pay TV distributors who believe that the decks are stacked against them in retransmission negotiations with major content producers should take a look at the 180-page media and entertainment report out today from International Strategy and Investment Group analyst Vijay Jayant. He urges investors to buy shares of AMC Networks, CBS, 21st Century Fox, Time Warner, and Viacom. He’s neutral on Discovery, Disney, and Scripps Networks. The big reason: These eight companies, he says, “control 90% of total TV viewership and 60% of total film production in the U.S., which means that, for the most part, they have the power to determine how content is packaged and priced to distributors and, therefore, consumers.” That muscle will be evident over the next few years as they squeeze cable and satellite companies to pay $60B in carriage fees for their channels in 2016, up from $45B this year. These payments “are drivers for the overall sector.” Factoring in “the consumer’s inherent psychological need for entertainment (even during tough times),” Jayant predicts healthy profits for his eight companies, with annual average returns on invested capital over the next three years ranging from 40.1% for AMC to 9.9% for Time Warner.
Richard Parsons, the former chairman of Citigroup who was chairman/CEO of Time Warner until he stepped down in 2007, has resurfaced in Harlem. He and wife Laura are opening two new uptown restaurants in Minton’s and The Cecil. Minton’s is a restoration of the famed 1930s/1940s Harlem jazz club Minton’s Playhouse. It will reside in the original location, redesigned as a contemporary jazz supper club. Next-door sister restaurant The Cecil will be an Afro-Asian-American brasserie that integrates the culinary traditions of the African Diaspora with traditional Asian and American cuisines. The Parsons have appointed their long-time friend and Cafe Beulah restaurateur Alexander Smalls as Executive Chef of both eateries. The Cecil opens September 23rd and Minton’s opens the following month.
Listen to (and share) episode 46 of our audio podcast Deadline Big Media With David Lieberman. Deadline’s executive editor talks with host David Bloom about a week filled with explanations from media executives regarding the many challenges to their lucrative business models, including whether cord-cutting is accelerating; if Aereo is a threat or a gimmick; whether Dish and DirecTV are facing a shotgun marriage forced by investors; and why Time Inc. is staying at Time Warner for a little longer.