TW counting on digital

Bewkes sees profits in new technologies

NEW YORK — New Time Warner chief operating officer Jeff Bewkes thinks Hollywood may need to rely less on the box office and more on other means of distribution, both in the U.S. and overseas.

Asked at the Citicorp investor conference in Phoenix Tuesday if there’s hope for studios to goose low profit margins, Bewkes pointed to digital delivery, “which offers the ability to reach more consumers all around the world at ever-more efficient and lower costs.”

He said the strategy was sound not only in the long term but even midterm.

Dick Parsons’ No. 2 didn’t elaborate on which digital pipes could be filled or how to fill them. But his comments came amid a prediction of a further shrinking theatrical-DVD window.

“It will continue to get closer,” he told investors.

Far from fearing it, though, he argued that studios should embrace window shrinkage because of potential economic benefits. As technology makes it possible to deliver films more quickly, “it becomes a good tradeoff point to move, and add that to what we’re doing.”

Later he elaborated that studios could capitalize, in part, by looking beyond the DVD. “The bells and whistles and the extra features you know from DVDs can easily be done online,” he said.

Despite pressure from Carl Icahn and Viacom’s recent breakup, Bewkes said he saw no reason to split up Time Warner. “At this point, we haven’t seen any material gain that we could give (investors) by doing that.”

The former HBO topper also said it made sense to keep the pieces under one roof for strategic purposes, affirming the importance of Warner Bros. and New Line in providing films to HBO. Keeping Warner Bros. Television under the same roof as the cable networks also has been “one of the major reasons TNT and TBS were able to rebrand themselves,” he said, and the reach of Time Warner Cable has allowed for greater penetration of HBO.

Bewkes acknowledged that Time Inc. “had a good year but didn’t have a great year” and that the WB net was “doing medium.” By restructuring relationships with affiliates, the net could again be profitable next year.

But the biggest problem remains programming. “We need some hits,” he said.

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