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Time Warner CFO Reiterates Support for Warner Bros. Delaying Content Rights to SVOD

7 Jan, 2016 By: Erik Gruenwedel

Time Warner CFO Howard Averill

Networks TNT, TBS and TruTV will run up to 50% fewer ads this year in an effort to retain and grow viewers

The day after the Consumer Electronics Show opened with Netflix showcasing its global expanse, Time Warner CFO Howard Averill reassured an investor group the media giant supports the rapidly evolving on-demand entertainment landscape — albeit on its terms.

Speaking Jan. 7 at the Citi 2016 Internet, media and telecommunications conference in Las Vegas, Averill said consumers are increasingly looking for on-demand content with easy to use interfaces.

“As a company, we are really well positioned to take advantage of where consumers are going, and we’re really focused on that,” Averill said, adding that streaming services offering the best consumer experience will also generate the best monetization opportunities. “We need to do it and we need to do it faster." 

At the same time, Averill said content holders want to be paid commensurate to the size and the scope of the subscription streaming services licensing content. Heretofore, the biggest purchaser and distributor of streaming content remains Netflix, which, due to its size and market ambitions has sought global rights to all content licensing.

Amassing that control in the hands of one SVOD service has begun to worry some content holders, notably Time Warner CEO Jeff Bewkes, who, during the previous earnings call, said Warner Bros. would delay licensing content to SVOD services in order to develop alternative distribution options, including proprietary TV Everywhere and SVOD, i.e. HBO Now.

Averill said the decision to allow TNT, TBS, HBO, etc., to retain the digital rights to their programming longer would allow the properties to themselves offer programming on-demand or streaming. He said the lost SVOD license revenue would be dwarfed by the chance to improve pay-TV viewership  and subscriber base.

“It’s really about adding value both to the distributor and to the networks,” he said.

The CFO said Time Warner has also facilitated monetization improvements to TV Everywhere by granting stacking rights to previous episodic programming that enable pay-TV operators to deliver content to subscribers on-demand and via mobile devices.

“That’s the normal value that should be provided to distributors and consumers,” Averill said.

Turner has mandated studio partners  grant stacking rights to original programming. Warner Bros. Television just granted its first broadcast stacking right to Fox TV for original series “Lucifer,” according to Averill.

“That is what has to happen, to continue to move along that path to make sure to provide the consumer what they’re looking for.”

Meanwhile, Time Warner in the fourth quarter will for the first time reduce by 50% the number of ads running on TruTV. The network’s offbeat comedies include “Adam Ruins Everything” and “Billy on the Street,” among others.

“We think that could be revenue-neutral,” Averill said, adding that programming such as “Animal Kingdom,” would overcome the ad shortfall by doubling as branding for TruTV.

“We have particular confidence around TruTV because there’s a lot of advertising demand … so that’s why we think it’s going to be revenue-neutral.”

Similar plays are planned for TNT and TBS, whose new president, Kevin Reilly, Jan. 7 told the Television Critics Assoc. winter press tour, pay-TV can create a better viewing experience by running fewer ads.

"We've overstuffed the bird," Reilly said.



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