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Time Warner CFO touts HBO’s Universal deal

John Martin says originals get the PR, but movies still get lots of viewers

Time Warner CFO John Martin on Monday called HBO’s weekend deal with Universal “very, very advantageous,” even crucial, given the mass of viewers that tune in for movies despite a constant drumbeat around original series.

He said parent Time Warner’s growth will come from overseas, and he anticipated double-digit cable net rate increases between mid-2013 through the end of 2016 as contracts expire with virtually all providers. HBO will lead international expansion, with HBO Go completing a tour of Latin America and Central and Eastern Europe and pushing into Asia and Western Europe as licensing deals expire.

Martin was upbeat on advertising, which proved uneven in the second half of 2012 for most networks (except NBC) with the Summer Olympics and a weak economy. Time Warner took a greater hit as it closed some operations overseas.

“We think the wind is at our back a little bit as we look into 2013. Admittedly, it’s early days. But scatter is steady, sports is on fire in terms of demand. (We’re) booking business with CPMs that are double-digits higher than what it was in the upfront,” Martin said.

He dismissed speculation that Netflix has been stealing viewers from cable and broadcast networks. “It’s not big enough to have a meaningful impact,” Martin declared.

He also took a little dig at Disney, which gets more bang from its Marvel deal than Time Warner does from owning DC Comics. Marvel’s licensing agreements were messy, he said, with “a complex set of rights and encumbrances. I am sure at some point Disney will earn a return on the Marvel acquisition.”

Of the HBO-Universal output deal, which now runs through 2021, he said, “It’s very, very advantageous to HBO and solidifies its strategic position.” Although viewers increasingly say they watch the net only for originals, that’s not what the data shows, he said. Some 40% of domestic subs watch only movies. Multiplex viewing is more than 80% film, and the channels need to be filled 24-7.

He said corporate acquisitions will continue to focus on local television production overseas and on the games space.

And in a somewhat contorted defense of Time Inc., he said: “Publishing is still a good business. It happens to be the portion of our portfolio today that doesn’t happen to be growing.”

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