Jeff Bewkes, CEO of Time Warner (not to be confused with Time Warner Cable, which is now a separate business), recently tried to calm analysts by declaring that the potential for people effectively cutting the cord in favor of packages like Internet Plus is “pretty limited… It won’t be attractive to most people, but might appeal to a segment.”
As I’ve mentioned before in my arguments for why Time Warner would be reluctant to sell a direct-to-consumer version of HBO Go that forgoes the whole basic cable requirement, the multibillion-dollar entertainment company stands to lose big from cord-cutting.
Time Warner doesn’t just own a few basic cable channels, it owns many of the biggest — CNN, TBS, TNT, HLN, Cartoon Network, among others. Not only do these stations rely on fees that it charges to cable providers (which are then passed on to you in your basic cable bill), they depend on advertising dollars to stay alive.
Obviously, if people cut the cord completely, the cable providers will want to pay smaller fees to Time Warner. And if fewer people are watching these channels, advertisers won’t pay as much for commercials.
Yes, Internet Plus — and the inevitable packages to come from other cable providers — may include some Time Warner stations, thus allowing Comcast, et al, to continue paying some carriage fees to Time Warner. But many of the people who opt for this tier will likely get it solely for the HBO access, meaning the cable channels will see ratings drop.
And so while it’s in Bewkes’ interest to make a deal that will keep fees coming in and keep people paying for HBO, it’s also in his interest to downplay any long-term negative impact this might have on Time Warner’s other channels.
“It’s something we don’t have to be concerned about,” he told the analysts.