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Bewkes: Netflix Bad for Repurposed Programming

6 Dec, 2010 By: Erik Gruenwedel

Jeff Bewkes

Time Warner Inc. CEO Jeff Bewkes wasted little time denouncing Netflix streaming and others as “experimental animal[s]” with poor business models for movies and repurposed television programming.

Speaking Dec. 6 at an investor event in New York, Bewkes said Netflix’s $7.99 monthly platform undervalues episodic programming for national and regional syndication, in addition to disc sales.

“It doesn’t make sense for our networks to license shows to a subscription service that isn’t paying close to the value of those programs,” Bewkes said. “Simply put, large aggregation and low price is not a particularly useful thing for consumers or content creation.”

Warner Bros. Television is one of the largest producers of episodic programming on network, cable and syndication, including more than 40 series currently on air.

Indeed, Warner recently commanded $2 million per episode for syndication rights to “Big Bang Theory.”

Netflix, Hulu and other online content aggregators threaten to erode that lucrative landscape. Netflix streaming primarily caters to repurposed TV shows, with more than 50% of its 17 million subscribers watching at least 15 minutes of content per month.

Bewkes characterized Netflix as a “utility” service with value for secondary content not destined for more lucrative channels and distribution windows. For example, Warner recently licensed to Netflix all episodes of “Nip/Tuck” when the former FX series couldn’t be sold for more money in syndication.

“Basically [Netflix streaming] should be things that don’t have further monetization in a window on a pay-TV network, basic cable network,” he said. Bewkes would prefer making repurposed Warner content available on demand on cable, satellite, and online.

The CEO said it doesn’t make economic sense to offer movies to Netflix streaming when there are alternative channels such as HBO, Showtime and Starz will to pay significantly more.

Bewkes characterized as “measly” recent reports Netflix was willing to pay upwards of $100,000 per episode for primetime TV shows.

“If it was true that a bid from a subscription service was incremental money to be added to an unchanged, unreduced bid from a big buyer [pay-TV licensor], then you might not have a conflict,” he said. “But the fact is, it wasn’t higher and it is not sustainable.”

He said studios will begin to charge more for rights as technology and consumer awareness of alternative platforms increases. Bewkes said there is not a conflict between the interests of the networks and the interests of the studios regarding Netflix or other services. He said content holders are trying to sell episodes through all the windows with the highest economic result.

“Netflix will have to buy all the rights [for all windows] — not a sliver,” Bewkes said. “What everyone needs to stay clear about is, what is the economic role for service that tries to have a lot of stuff on a subscription basis for $8 to $10 bucks a month versus an entire TV dial [of content]?”

Separately, Bewkes reiterated he wouldn’t mind revisiting the 28-day window for new release movies to the kiosk and subscription channels, which expire in a year.

“I don’t know if that is the right length,” he said. “It might well be later if that physical product is going to go into a subscription service. It absolutely could change.”




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