Jeff Bewkes

March 5, 2012 World Screen

 

This interview originally appeared in the MIPCOM 2011 issue of World Screen.
 
Jeffrey Bewkes worked for many years at HBO before joining the corporate ranks of Time Warner. He witnessed firsthand the development of HBO’s services from one channel to multiplex channels to on-demand. He also has extensive knowledge of the cable industry because, up to last year, Time Warner owned Time Warner Cable. From this vantage point, he is extremely confident of the long-term health of both basic- and premium-cable offerings.
 
WS: There has been so much talk lately about viewers canceling their subscriptions to cable or satellite providers. What’s your view on the issue of cutting the cord?
BEWKES: It’s like a story in search of facts that aren’t there. There hasn’t been cutting of the cord. We are in the midst of a tough economic period in the U.S., and there are flat growth rates to subscription television delivered either by a satellite, a telco or a cable operator. Approximately 95 percent of American homes subscribe to some package of tele­vision channels. That hasn’t really changed. Normally that has been creeping along at 1- or 2-percent growth as the economy adds households, but over the last year or two it’s been pretty flat. The huge noise was made when it went down a tenth of a percent.
 
WS: What is really causing the slower cable-subscription rates?
BEWKES: What is going on is much more about the competition among the distribution companies—cable, telephone and satellite companies. They compete for double- and triple-play offerings. And then on top of all of that there’s the recession.
 
WS: Do you see cord-cutting happening anytime soon, as so many in the press have been suggesting?
BEWKES: Usually there are two reasons given for why people would want to cut the cord. One, they see the rise in Internet-delivered video services like Netflix, and theorize that young people are not going to pay for cable-TV packages. We’ve seen no evidence to support that, particularly as young people graduate and get jobs and get their own homes. What we’re seeing is that new services that make it easier to enjoy TV programming are expanding the entire market for TV viewing.
 
The second reason everybody says there could be cord-cutting is because they think the cost of TV subscriptions is too high. [It is assumed] people will want to pay $10 for Netflix instead of $50 for 80 or more channels of TV. That whole thought process is also unsupported—in fact, more people are watching more TV than at any other time in the industry’s history and they are receiving greater value from it.
 
If you are paying for a TV subscription today, you are paying about $2 a day. That’s what it costs to get hundreds of channels of news and sports and movies and TV [series]. [And the fact is] ratings are going up, viewership is going up, program budgets are going up, retransmission fees are going up, profits are going up, everything is going up in the TV business. Everybody is watching; you are getting more choice, and you are about to get all of that on demand, whenever you want, on whatever device you want, with no change in price. It’s still only $2 a day—you can have every TV in your house lit up with all this programming, 24 hours a day, for your entire family, or you can buy half a cup of a grande latte down at Starbucks. The press tends to be off on this story, and the real story is that the appeal and value of multichannel subscriptions is improving as we move to a mobile, on-demand environment.
 
WS: Netflix recently raised its rates from $9.99 to $15.98 per month for online streaming and DVDs. Many subscribers were pretty upset, and I read in an article that one consumer said Netflix was no longer worth the money. For the same amount she could get HBO On Demand.
BEWKES: That’s true. That’s a 60-percent price increase. Nobody has ever put through a 60-percent increase—nobody is even putting through a 5-percent increase—in the cable industry.
 
WS: Tell us about HBO GO, HBO’s online authenticated on-demand service.
BEWKES: It’s very successful. The HBO GO app has been downloaded almost 5 million times, and 85 percent of the subscribers who are using HBO GO are watching dramatically more HBO programming. HBO has all these programs on demand, which no other network does. Remember, it’s going to be on every device, and it doesn’t cost anything to get it if you are an HBO subscriber. It’s a great example of where television is headed.