Time Warner CEO: Broadband only version of HBO 'not ready for primetime'

Two weeks after Netflix (Nasdaq: NFLX) CEO Reed Hastings predicted that Time Warner (NYSE: TWX) would develop a standalone broadband version of HBO, CEO Jeff Bewkes said the media giant has no plans to distribute HBO directly to consumers through the Web or mobile applications.

Jeff Bewkes, Time Warner

Bewkes (Image source: Time Warner)

"Given the content we're making at [Warner Bros.], the simple answer is that the concept of a subscription broadband network isn't that ready for primetime," Bewkes said on Time Warner's earnings call Wednesday.

Time Warner already distributes previous seasons of hit HBO series ranging from Boardwalk Empire to The Sopranos through Internet video outlets such as Apple's (Nasdaq: AAPL) iTunes Store and Amazon (Nasdaq: AMZN) Instant Video. Bewkes suggested that existing Internet video outlets remain the best distribution play for Time Warner's original programming.

"We are making programming that's on a lot of Internet channels. Some of it's on YouTube. We're trying to figure out what is the best economic house, what's the most monetizable for original programming that's obviously going to be seen on the VOD method. If you were talking about a, let's call it an Internet network on demand that come out of a producing company, Warner Bros., it's not clear that's the best way to offer genres to customers," Bewkes said.

Speculation that Time Warner may develop a standalone version of its popular HBO Go TV Everywhere website and mobile video apps has increased since HBO announced plans to launch a standalone broadband service in Scandinavia in August. Netflix, which competes against HBO with its subscription video service, predicted in a letter to shareholders last month that HBO would eventually launch a direct-to-consumer broadband service in the United States.

"We think it will make strategic sense eventually for HBO to go direct-to-consumer in the U.S., and become more of a competitor to Netflix; so, that is our operating assumption," Hastings, the Netflix CEO, said the letter.

While Bewkes left the door open for Time Warner to revisit the idea of developing a direct-to-consumer broadband version of HBO, he said the company remains focused on supplying content to existing TV networks and subscription video on demand services. "I don't want to rule it out exactly," Bewkes said.

The Time Warner chief didn't discuss the impact that a standalone version of HBO could have on HBO's cable and satellite affiliates, who have expressed concern that a direct-to-consumer product could lead to an increase in the number of subscribers that cut the cord on pay TV subscriptions, or reduce premium subscriptions.

HBO's performance helped Time Warner's networks division generate a $131 million (4 percent) increase in revenue during the third quarter. An increase in domestic HBO subscribers and international growth contributed to the increase, Time Warner said.

For more:
- see transcript from earnings call
- see the earnings release

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