Bewkes, Cuban question company's long-term prospects
Jeff Bewkes thinks Netflix doesn’t have the financial muscle to compete with existing models of distribution for top-tier TV shows and movies. Mark Cuban thinks cable and satellite operators will eventually become competitive via their own Web streaming services.
The Los Gatos-based company that has been grabbing headlines with a rapid-fire series of licensing deals in recent months was a hot topic on the first day of the UBS media confab in Gotham. In his keynote address Monday, Time Warner CEO Bewkes expressed skepticism about Netflix’s business model as the company shifts its focus from physical distribution of DVDs through the mail to Web streaming.
“Large aggregation at a low price is not particularly useful to consumers or for content creation,” Bewkes said during a keynote session at the annual confab.
Responding to a report last week that Netflix would be willing to pay $100,000 per episode for new TV shows airing this fall, Bewkes characterized the figure as “a measly little offer” compared with the hundreds of millions of dollars networks and cablers pay for shows, from their first airing through long-term off-network acquisitions and through DVD sales.
What makes sense for Netflix, Bewkes added, is to go after shows and movies that can no longer be monetized through existing channels. Netflix did just that in cutting a deal with Warner Bros. for rerun rights to “Nip/Tuck,” a show that WB’s syndie arm found to be a hard sell to other cablers.
For Netflix to be competitive, it would have to buy up the full suite of rights for TV shows, not just the “sliver” for streaming rights, Bewkes added.
Netflix has been cited as a prime driver of cord-cutting among consumers who drop traditional cable, satellite or telco subscription services in favor of Internet-based video services and over-the-air digital broadcasting, aka “over the top” providers.
But Cuban, of 2929 Entertainment and HDNet, predicted that cord-cutting will be a short-term fad and said that when cable and satellite ops pay upfront for richer online experiences for consumers, it will be “Net-who? Rok-what?,” referring to Netflix and Roku.
Panelist Blake Krikorian, founder of Slingbox, often played devil’s advocate to Cuban, taunting him that “services like Netflix would never exist if cable and satellite operators had done their jobs.”
Krikorian conceded that cord-cutting may be short-lived and that “the genie is getting stuffed back in the bottle,” a reference to Hollywood’s growing unwillingness to make movies and TV shows available for free streaming without some compensation from distribs.
Instead of people cutting the cord for cable TV, Cuban said a more likely scenario could be people cutting the cord for land-line Internet, as they find themselves with multiple subscriptions for various wireless services. He added that the biggest risk to pay TV might not be over-the-top video from the likes of Netflix but Internet games like “Farmville.”
“Remember what Aaron Spelling once said: ‘Television is the best alternative to boredom,’?” Cuban said. “You could say the same for games like ‘Farmville.’ ” A Netflix rep declined to comment on Bewkes’ and Cuban’s comments.
The chatter at the Wall Street confab didn’t do the company any harm. Netflix shares were up $8.02 at close of trading Monday to $193.47.