Who isn’t scared of Netflix? Jeffrey L. Bewkes, the chief executive of Time Warner, that’s who. The NYT says that although Netflix has been a successful business partner to the major studios for the past few years — the deals are expiring and they won’t get such an easy ride next time.
“It’s a little bit like, is the Albanian army going to take over the world?” said Jeffrey L. Bewkes, the chief executive of Time Warner, in an interview last week. “I don’t think so.”
The Times says the bravado stems from the fact that the Netflix/Starz streaming deal is expiring. It was a great deal for Netflix, but for Disney and Sony, the studios behind Starz, it’s considered “probably one of the dumbest deals ever,” by the media analyst quoted in the Times.
Here’s the NYT’s recap of the CEO’s comments:
Mr. Bewkes said that deal, which gave Netflix significant momentum into the new world of online video, potentially undermined the business model of cable television, based on the subscription fees that have steadily flowed even as other media businesses have suffered in the digital age. “Why should anyone subscribe to Starz when they can basically get the whole thing for about nothing?” he said. “That doesn’t make much sense.”
Mr. Bewkes explained that in the late 1990s the media industry embraced Netflix as a new distribution outlet for renting DVDs — without foreseeing that the company would eventually accelerate the decline in the sales of DVDs, which for years had been the lifeblood of the film industry. Now, with its success online, Netflix has raised fears that consumers may stop paying for cable television — the much-debated phenomenon of cord-cutting.