Bewkes Wants to Take Small Nets' Lunch Money

Time Warner CEO says $7 billion goes to little-watched cable channels

By Jon Lafayette -- Broadcasting & Cable, 9/20/2012 5:29:02 PM

As Turner Broadcasting gears up an aggressive campaign to raise the carriage fees for its cable networks, it's eyeing the sub fees currently being paid to little-watched networks.

Speaking at Goldman Sachs 21st Annual Communacopia Conference in New York Thursday, Jeff Bewkes, CEO of Turner parent company Time Warner, said that $7 billion in cable subscriber fees go to networks outside the top 40 channels. Those channels generate only about 17% of total viewing, Bewkes said.

"What you're going to see is basically a reallocation of the $7 billion of money going to failing channels into successful channels," Bewkes said. "That will probably be good for consumers because then the money can go into the highly watched programming."

It would also be good for Turner. "We have a higher proportion of channels in the top 40, and in the top 10, than anybody and our wholesale charge is relatively modest, which is why we're going to correct it."

Bewkes said Turner ought to be able to get its price increases without distributors having to jack up prices for cable. "In fact there hasn't been, really, a direct correlation of what happens in programming coast at the wholesale level to distributors and what they're passing on," he said, noting that costs for set-top boxes and DVR service haven't gone up, yet some operators have increased those charges to consumers.

One of those channels is CNN, which he acknowledged has been "under-performing" in the ratings, but is in the process of being "reinvigorated," Bewkes said. "I know we've said that before. We're really working hard at it."

Bewkes also said that the ad market appear to be improving.

"We've seen some pick up on the TV side," Bewkes said.

Things could get better if the economic stimuli put in place in the U.S. and Europe kick in. "The [stock] market went up. That may well lead," he said. He added that has talked to the heads of some global ad chiefs at the conference, and that their mood and spirit have been boosted by the actions in the U.S. and U.K. and that they might release some of their budgets to support strengthening economies.

"So that could happen. But I'm not saying it's happened yet," Bewkes said.