Getting millennials to pay for TV: Time Warner CEO
Providing choice is key to getting young people who are used to finding television shows and movies on the Internet for free to actually pay to watch them, Time Warner (TWX) Chairman and CEO Jeff Bewkes told CNBC on Friday.
"It's always been true that when people in their 20s go out of school and they try and get a house it takes them a while to sign up for cable," he said in a " Squawk Box " interview. But to convert those would-be subscribers these days, television networks, content creators and service providers need to agree to offer smaller, less expensive programming solutions, he argued.
For example, Time Warner is preparing to provide HBO as a stand-alone, over-the-Internet service to compete with the likes of online-only services such as Netflix (NFLX) and Amazon (AMZN) video.
Time Warner is also allowing its Adult Swim, TBS, TNT, CNN and Cartoon Network channels to be part of Dish Network (DISH)'s new Internet subscription service Sling TV whose lineup also includes ESPN and ESPN2, the Disney Channel, ABC Family, Food Network, HGTV and the Travel Channel. Sling TV will cost just $20 a month, much cheaper than a typical cable or satellite service with hundreds of channels.
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But Bewkes does also see value in that traditional programming bundle. "In your house, different people want different things," he explained, saying viewers generally have their 10 favorite channels or so. "It's just your 10 are different than your wife's 10. And your kids are different yet again."
"This has been a good deal. You're getting more channels. And the price of it has really not gone up," he argued.
Time Warner's business is sliced up into three divisions: HBO; Turner Broadcasting, which includes CNN and Turner Sports; and Warner Bros. Entertainment, which produces and distributes movies and TV shows.
The television, movie and digital media powerhouse has been slimming down of late-spinning off Time (TIME) in 2014 as well as AOL (AOL) and Time Warner Cable (TWC) in 2009.
"It's very clear we're strong in our current more independent silos," Bewkes said. "It's not as though we need to add something in order to perform the way we have."
Last year, Rupert Murdoch 's 21st Century Fox (FOXA) tried to buy Time Warner but later abandoned its bid after the two companies could not agree on price.
Asked whether he thinks Time Warner should seek a merger partner, Bewkes said megadeals are not the way to make money. "If you look at the history of it there have been probably more misses than hits when giant combinations like that have been tried."
As for the pending Comcast (CMCSA)-Time Warner Cable and AT&T (NYSE:T)-DirecTV (DTV) deals that could have an impact on the whole media landscape, he said the length of time they've been under review reflects the proper concern about broadband competition in the future.
"We want to make sure there is competition in the world of broadband providers," Bewkes added, but acknowledged that companies need to get a return on their investment to create a more robust online delivery infrastructure.
Users watching Google (GOOGL)'s YouTube and Netflix on any given evening use a large portion of all the available broadband capacity, Bewkes said, adding the problem is only going to get worse as more media companies either shift or add a broadband delivery stream.
Government policy has to foster competition and preserve returns, he said. "If those provider companies don't invest billions of dollars more in a much more vibrant broadband system, we're not going to be able to have the innovation we need in the country."
Disclosure: Comcast is the owner of NBCUniversal, the parent company of CNBC and CNBC.com.
