Jeff Bewkes on Netflix? Old Media Protests Way Too Much

The CEO of Time-Warner has been dismissing Netflix in a sotto voce that is beginning to resemble a primal scream

Jeff Bewkes doth protest too much. Way too much.

With increasing frequency and less and less subtlety, the CEO of Time-Warner has been dismissing Netflix in a sotto voce that is beginning to resemble a primal scream.

“It’s a little bit like, is the Albanian army going to take over the world?” he told The New York Times this week under a headline that read, “Time Warner Views Netflix as a Fading Star.” He added: “I don’t think so.”

The previous week he dissed the fast-rising digital movie giant at the UBS media conference, saying that Netflix lacks the financial wherewithal to compete with existing (read: Time-Warner) models of distribution for TV shows and movies.

"Large aggregation at a low price is not particularly useful to consumers or for content creation," he said during a keynote session at the annual UBS media conference in New York.

Uh-huh. Threatened much?

With Netflix stock skyrocketing some 200 percent over the past year, and deals piling up with everyone from Relativity to ABC Family to Epix, Bewkes had better believe that a new form of distribution for entertainment is not only viable, but on the rise.

Frankly, his nonchalant dissing is getting a little transparent.

There’s nothing wrong with Time-Warner, really. Except it’s a media behemoth stuck in a rut (like most), with no obvious way to recapture the kind of growth it once enjoyed.

Let’s be blunt: Time-Warner’s stock is flat as a DVD. It was at $31 per share on Monday, and about the same a year ago.

Meanwhile, Netflix is in steroid growth mode. Its stock has soared from not quite $60 per share a year ago to close at $183 per share Monday.

Irrational exuberance? Not necessarily. Netflix has not just slain Blockbuster, it is now breathing down the necks of HBO, Showtime and Starz, offering as much and more content as they do. (See graphic, above)

The decision to pursue a streaming service has taken off, with 70 percent of its 16 million subscribers now paying for streaming.

Understandably, this is a little frustrating for a master of the universe like Bewkes. Especially with HBO having lost 1.5 million subscribers in the past year.

Instead of addressing these incremental losses, he’s adopted the strategy of trying to reduce his competition to insignificance. (Albanian army?)

For some reason he believes that Netflix has no real financial clout. That’s despite the cash business that a subscriber service provides (hell, he ought to know). And Netflix is making deals that commit them to pay hundreds of millions of dollars for content.

That's not to imply that Netflix won't have to navigate around some icebergs. Those much vaunted content deals are expensive. A deal with Epix will cost the company $1 billion over five years, and if it wants to keep its distribution pact with Starz, Netflix will pay top dollar when that agreement ends next year. Netflix says that by shifting to streaming it can save on postage, but at some point it will be forced to pass on its costs to subscribers and raise fees. 

Also read: Exclusive: Relativity + Netflix Stream Pact Pushes Pay TV

I first heard Bewkes peddling this line in the bar with journalists at Herb Allen’s Sun Valley conference last summer. At the time, Netflix was described approximately as carrying muskets to fight against the media company’s titan battleship.

Since then Netflix has only continued to grow. And it wasn’t that convincing at the time. Jeff, it’s time for a new tack.