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Time Warner CEO sees 'vibrant rebirth' of TV networks

Time WarnerInc. is embracing on-demand and over-the-top services.

Asked during a May 4 earnings conference call whether thecompany might distribute content through a new Hulu subscription , Time Warner CEO Jeffrey Bewkessaid "maybe."

He suggested that the media company might consider "everyone of these packages," for its networks, whether that package comes fromHulu, Apple Inc.,Amazon.com Inc.,Verizon Communications Inc.or someone else.

"What we are watching happen — and I think it probablydid start with HBO a decade ago — is consumers want, expect, are going todemand SVOD access to all their favorite networks and all their favorite shows,"the executive said.

This puts Time Warner in an enviable position, Bewkes said,as the company owns some of the most desirable content in terms of both itsnetworks and its film studio. He has no doubt that each new SVOD orover-the-top service that launches will want to include Turner and Warner Bros.content.

"I think what you are seeing is a very vibrant rebirthof the strength of TV networks and TV programming across all of thesedistribution platforms," he said.

Asked whether these VOD and OTT packages threaten thetraditional pay TV universe, Bewkes said it was time for the industry to startthinking about cable or satellite subscriber numbers and OTT subscriber numbersas separate and complementary things.

Taken together, these new services will "increasepenetration, because consumers are going to find more packages that suit whatthey want."

Notably, Bewkes added the demand for this content and theseservices is in no way limited to the U.S. He noted that in the first quarter,HBO launched an OTT service in Mexico and announced plans for OTT launcheslater this year in Spain, Brazil and Argentina.

"That's all part of a broader push across the companyto develop new services and capabilities," he said.

He also pointed to Warner Bros.' recent of the subscriptionvideo-on-demand service DramaFever, whose flagship channel offers Koreantelevision and film dramas, as well as to the upcoming launch of FilmStruck,Turner's first direct-to-consumer product in the U.S. This new SVOD service,developed and managed by TCM(US) in collaboration with the Criterion Collection, will featurean eclectic mix of contemporary and classic art house, indie, foreign and cultfilms. FilmStruck will also be the new exclusive streaming home for thecritically acclaimed and award-winning Criterion Collection, which will includethe Criterion Channel, a new premium service programmed and curated by theCriterion team. FilmStruck is slated to launch in fall 2016.

"So we are making progress on many fronts, both insideand outside the traditional ecosystem," Bewkes said.

Time Warner on May 4 reported that net income fromcontinuing operations climbed to $1.17 billion, or $1.46 per share, up from$933 million, or $1.10 cents per share, in the year-ago period.

The S&P Capital IQ EPS consensus estimate for the firstquarter was $1.29 on a normalized basis and on a GAAP basis.

First-quarter revenues increased 3% year over year to $7.31billion due to growth at Turner and Home Box Office, partially offset by adecline at Warner Bros. Revenues at Turner grew to $2.91 billion from $2.71billion, and HBO revenues climbed to $1.51 billion from $1.40 billion, whilerevenues from Warner Bros. fell to $3.11 billion from $3.20 billion. Totalrevenues included the unfavorable impact of foreign exchange rates of about $115million in the quarter.

Looking ahead, Time Warner reaffirmed its previous guidance,saying that it still expects adjusted 2016 EPS to come between $5.30 and $5.40.