AT&T bought Time Warner in 2016 for $85 billion as part of a strategy to acquire entertainment assets to bolster its mobile phone business. This year, it has unwound that strategy, by spinning off DirecTV, an earlier expensive acquisition, and by agreeing to sell WarnerMedia to Discovery.

Bewkes, AT&T CEO John Stankey and Discovery CEO David Zaslav are among the high-profile executives interviewed for a new book about HBO by James Andrew Miller titled Tinderbox: HBO’s Ruthless Pursuit of New Frontiers.

According to quotes from the book confirmed by The Wall Street Journal, Bewkes complains that AT&T execs didn’t listen to Time Warner execs after the merger. In fact, most of the top executives of Time Warner’s key units, HBO, Turner and Warner Bros., were gone within a year after the merger was approved.

Bewkes said he and other WarnerMedia board members thought AT&T “would basically leave our people alone." Bewkes said “we didn’t think they would go to such a level of malpractice as to not listen to anybody … even though they themselves had no experience in those areas.”

AT&T’s strategy was to combine HBO, Turner and Warner Bros. as it pursued a direct-to-consumer strategy, a longtime AT&T executive, was put in charge of WarnerMedia, and the top HBO, Turner and Warner Bros. execs all soon departed.

In the book, Stankey said change was called for at WarnerMedia.

“If you are in an acquisition and somebody pays a premium for your stock, by definition it means something has to change,” Stankey said. “If you paid a premium for an operation and you continue to operate it exactly the same way, you never pay back the premium.”

Stankey said the strategy of buying Time Warner was sound, but that shareholders were impatient and didn’t recognize what WarnerMedia was accomplishing. “They refused to give us credit for that progress,” he said.

That led to the deal with Discovery.

Discovery CEO David Zaslav told the book’s author that “if we’re successful, and I believe we will be, there will be Harvard Business School case studies on this deal.” ■

Stephenson also dismissed government suggestions that AT&T would use Time Warner content, which includes CNN, HBO, TBS, TNT, Cartoon Network and others, as a club to force higher prices for programming or to lure subscribers to other pay TV services to AT&T.

Stephenson’s testimony followed that of Time Warner chairman and CEO Jeffrey Bewkes, who told the court Wednesday that government claims the combined entity would force higher prices or exclusivity were “ridiculous.”

According to reports, Stephenson said he viewed the Time Warner agreement as a “vision deal” that would help the company compete against emerging OTT providers like Netflix and Amazon. The Time Warner deal is a big shift in strategy for the company into the content arena, a move Stephenson said the company has to make quickly.

“We knew we had to have scale,” he said, according to Variety. 

Stephenson was the second AT&T executive to take the stand in the trial in as many days. Late Wednesday AT&T senior EVP of AT&T-Time Warner integration planning John Stankey, dismissed the government’s fear that the combined entity could join with fellow vertically integrated entertainment company Comcast to withhold content from rival distributors. Stankey said that wouldn’t make good business sense and given AT&T’s many battles with Comcast in the past, was extremely unlikely.

“I’m not going to cooperate with someone I don’t like,” Stankey said of Comcast, according to Bloomberg. “We don’t want to cooperate with Comcast and play their game.”

AT&T proposed the Time Warner merger in October 2016, combining Time Warner’s hefty content assets – it owns cable channels TNT, TBS, Home Box Office, Cartoon Network, CNN, and others, as well as the Warner Bros. television and movie production studios -- with AT&T's 25-million-customer-strong distribution network. 

A little more than a year later, the U.S. Dept. of Justice moved to block the deal on November 2017, claiming that the union would place too much power in the hands of one company and forcing the parties to work out a conclusion in court. The trial, held in the U.S. District Court for the District of Columbia, began on March 19. 

The government has claimed that a combined AT&T Time Warner could use blackouts of Turner networks to other distributors to lure customers to AT&T or could prevent distributors from using its HBO premium channel as a promotional tool.

Networks regularly let their channels go dark during heated carriage negotiations, and though there have been some exceptions, most of these disputes are worked out in days or weeks.

AT&T and Time Warner have pledged to offer distributors arbitration in carriage disputes and have promised not to block out any channels for seven years after the deal is approved, which would seem to blunt the government’s argument. 

The government has claimed that a combined AT&T Time Warner could use blackouts of Turner networks to other distributors to lure customers to AT&T or could prevent distributors from using its HBO premium channel as a promotional tool.

“It’s ridiculous,” Bewkes said of the government’s claims, according to Deadline.com. “It’s not how it works. If any of our channels goes off the air for any period of time, it is catastrophic for us. We lose a lot of money.”

He then pointed to a 2014 dispute with Dish Network that led to Turner networks going dark for about one month, which he said cost the programmer $150 million in lost carriage fees and advertising revenue.

But some smaller operators have said under oath that they believe AT&T-Time Warner will stifle competition. On Tuesday, RCN CEO Jim Holanda said he believed AT&T would use Turner programming to “disadvantage us,” according to a Bloomberg report.

Bloomberg added that Holanda said he had the same fears during the Comcast-NBC merger, but admitted under cross-examination that he had no data to back up claims that he would lose customers as a result of the Time Warner deal. He also admitted that most of the losses RCN has endured have come as a result of increased competition from over-the-top providers, not from traditional distributors like AT&T, according to Bloomberg. 

That seemed to play into Bewkes’ main point – that the merger is necessary to help Time Warner better compete. Bewkes cited two “tectonic changes” in the TV business over the past several years that have swung the advantage to Time Warner’s competition: the advent of Netflix and its ability to go directly to the consumer, and the second, the shift in the advertising market to digital platforms like Google and Facebook.

"They can sell a Chevy ad just to people who are trying to buy a car," Bewkes said, according to CNN, adding that companies are "moving away from television advertising in general." 

AT&T chairman and CEO Randall Stephenson is expected to take the stand on Thursday.  

Time Warner, preparing for its acquisition by AT&T, said its second-quarter profit was up 11% as subscription revenue rose at Turner and HBO.

Net income rose 10% to $1.06 billion, or $1.34 per share, from $952 million, or $1.20 per share, a year ago. Revenue rose 5% to $7.3 billion.

The results topped Wall Street forecasts.

Time Warner said it continues to expect the AT&T deal to close before the end of this year. The company also reaffirmed its full-year earning guidance.

At Turner, revenue rose 3% to $3.1 billion. Subscription revenue was up 13%. Operating income was down 7% to $1.1 billion because of higher expenses. Programming costs were up 12% mostly because of the new licensing deal with the NBA.

Turner's advertising revenue was down 6%, and content revenue was down 8%. The company said not having the NCAA Championship and Final Four games this year cost it 8% worth of ad revenue. It also had two fewer NBA playoff games and lower ratings at its domestic entertainment networks. Ad revenue increased at CNN and Turner’s international networks.

Related > Turner’s Martin: ‘We Need Fans, Not Viewers’

At HBO, operating income increased 10% to $531 million as programming costs declined 3%. Revenue rose 1%, with subscription revenue up 8%, while content and other revenue was down 44%.

“We’re very pleased with our first-half results, which keep us on track to achieve our objectives for the year,” said CEO Jeff Bewkes. “Our performance is a result of the continued successful execution of our strategic objectives – with the strong subscription revenue growth at Home Box Office and Turner a great example of this – along with the investments we’re making in our brands and high-quality video content.”

Related > TCA17: Turner’s Kevin Reilly Says Consolidation Will Whittle Down Cable Channels

Warner Bros. operating income was down 28% to $233 million from last year when Flixster was sold. Adjusted operating income was up 20% to $261 million. Revenue rose 12% to $3 billion as higher theatrical revenues were partly offset by lower TV revenue.

Bewkes noted the box office numbers for the films Wonder Woman and Dunkirk, and the Emmy award nominations earned by HBO and Warner Bros.

“These results and accolades reflect strong execution and the investments we’ve been making, both in the best content and in ensuring that we deliver our content across platforms to offer engaging experiences for our audiences,” he said. “Accelerating our pace of innovation and being able to connect more directly with consumers are among the exciting reasons for our proposed merger with AT&T, which remains on track to close before year-end, pending regulatory review and consents.”

While traditional Pay TV operators have generally suffered customer declines due to new virtual MVPDs and other over-the-top providers, those very same newcomers have offset losses for the big programmers.

For at least the past two years, most cable programmers have seen traditional TV carriage dip about 2% annually as customers either drop service, reduce their programming packages or take their money elsewhere. The growing number of competitors — the latest, Hulu Live TV, launched its beta-test version last week (see Cover Story) — has steadily chipped away subscriber rolls at the top pay TV distributors.

Comcast, the only major cable operator that gained basic video subscribers last year (161,000) and in the first quarter (42,000) did so largely through retention efforts and the rollout of its next-generation X1 platform. X1 also has given customers better access to subscription video-on-demand services; X1 includes an embedded app for Netflix with others likely to follow.

In April, Comcast launched a wireless service, Xfinity Mobile, that should also boost those retention efforts.

On the programming side, some content providers are the streamlined services counteract losses resulting from their networks being part of a larger pay TV bundle.

Time Warner Inc. chairman and CEO Jeff Bewkes said on an earnings call last Wednesday that virtual multichannel video programming distributors (vMVPDs) are having an impact. “It’s mitigating some of the declines at the traditional providers,” he said. “So, if new offerings can combine that kind of attractive pricing and packaging with the sort of new 21st century on-demand platforms, interfaces, then we think they can definitely attract new subs into the network system. And that’s a great opportunity for Turner and every other network to find its natural audience.”

CBS chairman and CEO Les Moonves said the company will bundle its CBS All Access and Showtime OTT offerings for the first time this year while continuing to offer them separately. For any skinny bundle to survive, he said, it must include the CBS network.

“We are not being affected in any way by any changes in subscription numbers throughout the industry,” Moonves said on the call.

While consumers seem ready to drop premium channels such as HBO, Showtime and Starz from their traditional pay TV packages, they’re snapping them up through other avenues, Morgan Stanley media analyst Ben Swinburne found in a recent report.

In a recent survey of about 3,100 pay TV customers, Swinburne noted that premium uptake is down so far this year compared with last year — about 46% of respondents said they had at least one premium network, vs. 53% in 2016. But he still predicted premium network subscribers would be up in 2017, as they have been for the past five years, due mainly to digital distribution.

Every premium channel has a digital direct-to-consumer counterpart, which also stems the losses. And the vMVPD field, once occupied solely by Sling TV (which launched in 2015), has become increasingly crowded.

In addition to apps from individual networks, services like CBS All Access, Sony PlayStation Vue, DirecTV Now and YouTube TV are increasingly gaining customers. Swinburne estimated by the end of this year, virtual MVPDs will have 3 million subscribers.

Hulu Live’s launch is another sign of increased vMVPD traction, Swinburne said. “Notably, we believe Hulu should benefit from its existing, scaled direct-to-consumer subscriber base and its ability to drive advanced advertising innovation,” he said.

Hulu Live should do well because it will carry “gold” tier networks from The Walt Disney Co., CBS, NBCUniversal and Time Warner, as well as Scripps Networks Interactive’s three core channels of HGTV, Food Network and Travel Channel, said Swinburne. Hulu’s owners — Disney, Fox, NBCUniversal and Time Warner — should also “benefit from involvement in a new distribution platform as pay TV consumption continues to evolve,” he added.

Time Warner chairman and CEO Jeff Bewkes said AT&T’s pending $108.7 billion merger to buy his company will drive advanced advertising for every network, not just his own.

At the UBS Media and Entertainment conference in New York, Bewkes said that there is a big opportunity in advanced advertising on the VOD platform. And he said he hopes that the AT&T merger, which counts targeted advertising as a big reason for the pairing, will help drive acceptance.

“If you’re talking about VOD ads, it’s going to evolve differently,” Bewkes said. “In terms of load it probably should be less; it’s going to be taking the recent engagement and the tremendous loyalty it has. You need to get it targeted, you need to get it measured; it therefore can be more valuable and therefore it can be less interruptive, therefore people will watch through it. “We’ve been investing in that at Turner. We probably have the higher percentage of our ads in the more aggressive new advertising forms. We’re going to keep doing that. We hope the AT&T combination helps us with that. We hope it helps everybody. We want to foster competition in the ad business, which currently is getting fairly focused in two companies – Google and Facebook – and we think there is plenty of room for competition and therefore growth for us, so we’re going to go there. We’re here to help.”

Bewkes also gave a lengthy explanation as to why Time Warner still makes money on AT&T’s decision to price the HBO offering on its DirecTV Now over-the-top service at $5 per month, roughly one-third of the price other distributors charge for the service. Bewkes said that HBO still has a robust wholesale price – which he did not reveal – adding that charges to distributors vary based on the level of subscriber penetration for HBO service. So, a distributor that has 40% HBO penetration pays less than one with 20%, he said.

He added that offering HBO at a lower retail price is something Time Warner has wanted for years, but that distributors have tied other programming or services with flat price structures to the premium channel which has driven up charges.

“We’ve always wanted, which is why we had to launch [HBO] Now a few years ago, to make HBO in a more affordable price range,” Bewkes said. “We welcome distributors making aggressive price offerings for HBO.”

Bewkes also seemed to dispute recent reports that its standalone HBO OTT service, HBO Now, was having difficulty growing subscribers. When UBS media analyst Doug Mitchelson, who was interviewing Bewkes, mentioned he thought a recent estimate that HBO Now had about 1 million subscribers was low, Bewkes responded, “me too.”

“We didn’t hit the wall and we’re not building the wall,” Bewkes said.

Regarding its cable networks, Bewkes said recent affiliate renewals for its Turner networks were “very robust.” And he added that CNN is expected to build on the momentum of 2016 into next year through its mix of domestic and international news, digital offerings and strong original shows, like Anthony Bourdain Parts Unknown.

“That combination, which is a pretty wide mission for CNN, has worked great and that’s  why we are  doing so well in earnings and we’ll do even better next year,” Bewkes said.                 

While shareholders continued to fret about the possibility its $108.7 billion merger with AT&T might be blocked, Time Warner chairman and CEO assured analysts on an earning call Wednesday that the two companies are focused on getting the transaction done.

“Both the sides, AT&T and us, want to get this done,” Bewkes said on Time Warner’s third quarter earnings call Wednesday. “We think the combined company is going to have competition-spurring advantages and more choice. What you should focus on that AT&T and we who have made very significant the commitments to meet the conditions necessary if they are regulatory hurdles to close the deal. That’s what we’re focused on.”

AT&T and Time Warner announced their mega-deal on Oct. 23, calling it a way to bring new innovations in programming and distribution to the media business. Early on politicians and regulators expressed some concerns about the combined company’s size, and Time Warner’s stock has traded as much as 20% under the AT&T offering price of $107.50 per share since the announcement, signaling they too believe approval could be difficult.

Time Warner shares were down 33 cents (0.4%) to $87.92 each in early trading Wednesday.

Bewkes also deflected questions as to whether other companies had approached Time Warner about a possible deal, adding “Let’s focus on AT&T.”

According to CNBC anchor David Faber, Apple, which some reports have claimed could make a competing offer for the company, is not interested in a deal.

According to Faber, Apple is not considering making a bid for Time Warner now.

“What I can tell you about Apple guys, is right now, according to people familiar with its thinking, it's not interested,” Faber said according to a transcript of his show, Squawk on the Street. “Apple is not interested in buying Time Warner at present.”

Faber added that things could change, especially if Time Warner’s stock price continues to fall or it faces big hurdles from regulators.

“But anybody expecting an overbid from Apple at this point, certainly, it is not coming," Faber said. "Again, they are sort of not interested at this time. And it doesn't appear that there would be any other potential interest.”

That comes after Apple CEO Tim Cook left the door to a Time Warner bid slightly ajar on his earnings call last week, stating that the computer giant was open to acquisitions of any size.

While regulatory scrutiny is expected to be intense, Time Warner said it is looking into whether certain licenses it owns would need to be transferred to AT&T in a deal, which could determine whether the Federal Communications Commission participates in the approval process. The FCC basically regulates the transfer of broadcast licenses and owns just one – WPCH in Atlanta, which is managed by a third party. Some have speculated that Time Warner could sell the station or place it in a trust to avoid FCC scrutiny of the AT&T deal.

On the call, Time Warner general counsel Paul Cappuccio said the company was looking into the license situation.

“The FCC reviews license transfers,” Cappuccio said on the call. “If a license transfer isn’t required to AT&T, it won’t be required to AT&T. …We are currently looking at if any of them need to be or whether they’re not needed. There aren’t material licenses that are the bedrock of our business that AT&T would need to operate our business. Does AT&T need a walkie-talkie license that CNN holds to own CNN? There are others like earth stations that are a little more complicated in an analysis. We’ll do what the law requires. But we don’t have things that are material to the actual conduct of the business that AT&T would need in operating our assets.”

Bewkes also commented that TV Everywhere, the term he helped coin years ago, hasn’t worked out the way he hoped.

Bewkes said the original TV Everywhere vision was for more video on demand across all platforms, better interfaces and easier authentication. While that hasn’t been adopted as quickly as he had hoped, the AT&T deal could push the accelerator.

“This [AT&T deal] will help speed that up and make yet another platform and interface available to all networks and therefore give a national offering available to consumers,” Bewkes said. “I think it will spur everybody – other networks, other distributors – to offer more VOD and better interfaces. That’s good for everybody.”

Update: This story was updated to correct an error that WTBS was the only broadcast station owned by Time Warner. WTBS changed its call letters to WPCH in 2007.  

In hammering against the AT&T-Time Warner deal last week, some individual groups appeared to be treating the CEO of Time Warner as “He-Who-Must-Not-Be-Named.” OK, we know, Lord Voldemort is a TW employee, sort of, but that is strictly in his capacity as the archest of arch villains in the Harry Potter tales.

For example, Sen. Bernie Sanders (I-Vt.), in his letter to the Department of Justice slamming the deal, proposal referred only to “the CEO of Time Warner” decrying all those millions in stock options that could be coming his way.

Having dutifully added the name of Time Warner CEO “Jeff Bewkes” to those nameless reports on the pushback, The Wire was momentarily panicked when the Senate Judiciary Committee sent out this notice last week about the oversight hearing on the deal: “Both Randall Stephenson, the CEO of AT&T, and Robert Marcus, the CEO of Time Warner, will testify.”

Could we have been wrong, or perhaps this was a case of “He-Who-Must-Not-Be-Named-Correctly.”

As readers of these pages know, Marcus is the now-former CEO of Time Warner Cable who also exited with millions in the bank after the Charter Communications merger.

Within 15 minutes, which is nanoseconds in D.C. time, the committee had sent as a follow-up an amended announcement with Bewkes where Marcus had been, plus an apology for any confusion.

Accepted.

BOSTON — The Cable Television Pioneers salutes its golden-anniversary class by honoring a group of industry professionals who are as much a part of cable’s vibrant present as of its storied past.

The 50th class of Pioneers — 14 industry executives who have made significant, groundbreaking contributions to television — includes Comcast chairman and CEO Brian Roberts, who helped build his family business into the No. 1 U.S. MSO and one of the world’s largest media companies; and Time Warner Inc. chairman and CEO Jeffrey Bewkes, who presided over the media conglomerate’s shift to focus on its core film and TV entertainment businesses.

Other members of the 50th anniversary class include Marwan Fawaz, a developer of the DOCSIS spec who served as CTO of two different cable companies and CEO of Motorola Home; Yvette Kanouff, senior VP of cloud solutions at Cisco Systems and one of the top women executives in the tech space; Peter Kiley, VP of affiliate relations at public-affairs network C-SPAN; and Leslie Ellis, longtime Multichannel News technology columnist.

This year’s honorees join the more than 700 men and women who comprise past Cable TV Pioneers classes, including the 21 entrepreneurs from the first Cable TV Pioneers class in 1966. They were honored on Sunday, May 15, at a banquet held at the Fairmont Copley Plaza Hotel in Boston on the eve of INTX: The Internet and Television Expo. For more on the 2016 Cable TV Pioneers, visit cabletvpioneers.com.

Profiles in this section were written and reported by Craig Kuhl.

JEFF BEWKES

With his roots firmly planted at HBO and later at Time Warner Inc., Jeff Bewkes’ rise to his latest position as Time Warner’s CEO, and his repositioning of the company from a mixed portfolio of books, magazines and entertainment to a core business of filmed and broadcast entertainment, has been nothing short of spectacular.

His impact at HBO was felt early on, when he moved the programmer from its focus on theatrical films and sporting events to original programming, tripling the company’s profits and introducing its breakthrough programming venture, The Sopranos, to a worldwide audience. His success at HBO did not go unnoticed, and in 2002 he joined Time Warner’s Entertainment & Network Group, and then became the company’s chairman and CEO in 2008.

Along the way, Bewkes has been active in his community of Greenwich, Conn., supporting many nonprofit initiatives, and taking part in Media. NYC.2020, a New York City initiative to strengthen and grow the city’s media and technology sectors.

DAVID CERULLO

David Cerullo’s 40-year career as entrepreneur and businessman has included public relations and advertising startups, real estate development and construction, and, in 1990, the opportunity to resurrect a then-bankrupt Inspiration Network.

Call it divine intervention or a savvy spirit of entrepreneurship, but under Cerullo’s guidance INSP is now available worldwide, becoming the first network to receive national ratings from Rentrak; it later signed on as a Nielsen client.

Cerullo’s early construction experience paid off when he oversaw the development of the state-of-the-art Media- Comm studio complex in Charlotte, N.C.

Yet his pioneering efforts go beyond INSP (as the family-aimed network is now known) and include numerous humanitarian endeavors, most notably the programmer’s partnership with Convoy of Hope, an organization that provides relief and other services in response to natural disasters.

He has also found time to write eight books and has championed silent partnerships with numerous organizations that assist the needy worldwide.

GLENN DUVAL

Selling cable equipment for his father’s manufacturing representative firm, circa 1980, was all the inspiration Glenn Duval needed to begin his pioneering career in cable as a leader in providing amplifiers, standby power, test sets and myriad core cable components to a rapidly growing industry.

Since 1987, when Duval assumed leadership of the B.E. Duval Co. and renamed it Challenger Cable Sales, the company has become an integral part of the supply chain at every major U.S. MSO and in several international markets.

At one point, Challenger was one of the largest distributors of cable remote-control batteries in the country.

Duval would also diversify the company, moving into the power supply business for cable modems and set-top boxes and becoming a leading figure in the development of energy-efficient supplies.

Beyond his pioneering cable career, Duval is one of the original members of the Golden Gate Chapter of the Society of Cable Telecommunications Engineers and a staunch supporter of The Cable Center. He is also an active adult leader in the Boy Scouts of America and founder of the University of California at Santa Barbara Volleyball Foundation.

MARWAN FAWAZ

Since Marwan Fawaz joined the cable industry in 1985, as a design engineer at Times Mirror Cable Television, he has been at the forefront of numerous technical launches — most notably DOCSIS 1.0 and its subsequent versions.

His impact on the cable industry has been felt not only through his technical advancements, but his savvy leadership as chief technology officer for two of the top five MSOs, and as CEO of Motorola Home.

His 30-year journey through the industry has included executive positions at some of the leading MSOs and startups, including MediaOne Group, Infinity Broadband and Charter Communications.

In addition to his pioneering role in developing DOCSIS, he was instrumental in launching voice-over-Internet protocol technology, switched digital video, HDTV, 3D Video, Ethernet business services and simulcast, among others.

He has also found time to author numerous technical papers, while serving as a director of Synacor and on advisory boards of ADT and Liberty Global.

Most notable among his many volunteer efforts are his role organizing industry training and educational activities, and his support for Habitat for Humanity fundraising and home-building efforts.

LESLIE ELLIS

Leslie Ellis’s passion for all things technology, and her unique ability to translate dense, complex technical terms into readable prose, has earned her a well-deserved place in the Cable Pioneers class of 2016.

Ellis wrote the A-Z dictionary Definitive Broadband: Next Generation and other guides to broadband technology terms and definitions that have become the industry’s go-to reference sources.

She began her career in 1987, writing manuals for Telecommunications Product Corp., which made ad insertion gear. She served then served as managing editor of CED magazine, senior tech editor of Multichannel News, and senior tech analyst for Paul Kagan Associates. She writes the popular MCN column “Translation Please,” now in its 16th year.

As moderator of more than 200 panels, Q&As and video interviews, Ellis has become a respected figure in the industry. She also helped develop cableFIRST, an initiative to encourage cable personnel to mentor middle- and high-school students in FIRST Robotics competitions.

Outside of cable, Ellis is an avid beekeeper who co-founded the Women Who Bee beekeeping club and executive produced the documentary film Bee People. She maintains an active fund raising schedule for charitable organizations.

JOHN GIBBS

John Gibbs’s 30-year commitment to the cable industry as a valuable outside counsel, culminating in his current position as Comcast’s senior vice president of state government affairs, has earned him a place in this year’s class of Pioneers.

During cable’s early franchising years of the 1980s, Gibbs provided counsel on franchise transfer activities for Comcast’s acquisitions of AT&T Broadband and other major industry transactions, such as the AT&T-MediaOne Group, AT&T-Tele-Communications Inc. and America Online-Time Warner Inc. deals.

He also provided counsel to the National Cable & Telecommunications Association with respect to regulation of utility poles owned by municipalities and cooperatives.

Gibbs most recently was handed oversight of NBCUniversal’s state government affairs efforts, and coordinates the executive committee of Comcast’s Internet Essentials program, the company’s low-cost Internet service for lower-income households.

He continues his work as a key member of the NCTA’s state association advisory committee and state issues group.

His local volunteering efforts include work with his local park district and the Hennepin County (Minn.) Library Board, which manages a 41-library system.

STEVE GOLDMINTZ

In the late 1960s, while assisting with his father’s Master Antenna Television (MATV) service calls to hotels in Queens, N.Y, Steve Goldmintz knew a cable career was in his future.

It wasn’t long before he would begin work at a young cable company, Tele-PrompTer Cable TV in Manhattan, in 1974. His responsibilities were many, including sales manager, real estate manager, marketing analyst and other functions not uncommon during those early cable days.

He later joined Premium Channel Publishing, where for 15 years he produced marketing brochures for cable operators and created multi-pay guides.

Goldmintz moved into recruiting in 1999 and now manages the broadband, media and cable TV practice at Marcum Search LLC, a unit of accounting firm Marcum LLP.

As the long-heralded champion of the CTAM New York, his contributions beyond his work as consultant and cable recruiter have been invaluable to the industry’s marketing advancements.

Beyond his industry pioneering career, Goldmintz has volunteered and assisted numerous non-profit organizations, including the Boy Scouts of America, WhyHunger and others.

JOHN HESLIP

John Heslip’s 40-year cable career has taken him from “assorted non-management positions” at Canada’s largest MSO, Rogers Cable, to his current position as senior vice president of access networks and technical operations for Comcast Cable.

His journey through the industry and his continued advancements of cable technology, engineering and plant management have earned him a place in this year’s class of Cable Pioneers.

Since those early days at Rogers, Heslip has been on the leading edge of network engineering, project management. For the past 15 years, he has focused on technical management, primarily overseeing network builds and rebuilds, most notably with fiber network deployment.

His signature accomplishments include successfully managing the largest North American MSO upgrade in cable history (AT&T Broadband), overseeing national technical operations involving more than 40,000 technicians and related staff.

His outside activities include assisting organizations such as the United Way and Mount Evans Home Health Care & Hospice in Evergreen, Colo., as well as mentoring numerous cable professionals.

YVETTE KANOUFF

Since her first days in cable at Time Warner Cable in 1994, Yvette Kanouff has been an inspiration to younger women entering the cable industry in the technology and engineering fields that early on consisted of few women.

Drawing on her 10 years of engineering and software development experience at Lockheed Martin (then Martin Marietta), Kanouff would join TWC as director of interactive technologies; she is now senior vice president of cloud solutions for Cisco Systems.

Along the way, there were stops at SeaChange International, where she would launch its VOD product line and eventually rise to president; and Cablevision Systems, where she served as chief technology officer and chief information officer.

Kanouff’s ability to inspire women to pursue careers in technology and engineering may be her lasting legacy, however. Her unique ability to absorb technical information, assimilate it quickly and add value to an operation has been one of her hallmarks.

Based on her leadership skills and engineering expertise, she became the first woman ever elected as chairman of the Society of Cable Telecommunications Engineers, and has earned a well-deserved place in this year’s class of Pioneers.

MARK LIEBERMAN

Mark Lieberman’s move from the Department of Commerce, where he served as Deputy Secretary and Assistant Secretary for Technology, to the cable industry wasn’t exactly a normal career path.

But for Lieberman, his work on the multifaceted initiative to encourage competition in the media and telecommunications industry provided the credentials for a career in cable and entry into this year’s class of Pioneers.

He evolved into the rare executive that built and managed cable and technology companies, publishing empires and most recently joined Viamedia, the country’s largest independent TV advertising management solutions company as president and CEO.

His all-in commitment to the industry includes serving on the board of advisors at Adfin, a real-time insights company for programming and online advertising, and the Video Advertising Bureau (formerly Cable Advertising Bureau).

But charity has also been top of mind for Lieberman, where he has worked with several charitable organizations, including past president of the Leukemia Society’s New York chapter.

PETER KILEY

For 30 years, C-SPAN’s Peter Kiley has built a reputation as one of the most effective affiliate relations and public affairs professionals in the business.

His early days as listings coordinator at C-SPAN would lay the foundation for an impressive career at the cable public-affairs network, and lead to his entry into the 2016 class of Pioneers.

Kiley for four years managed the network’s two 45-foot, high-tech C-SPAN Buses as they toured the country producing programs to advance the community and educational efforts of cable operators.

Now C-SPAN’s vice president of affiliate relations, Kiley continues to serve on numerous boards and industry related committees, while assuming leadership roles at CTPAA, CTAM and the NCTA public affairs committee.

His efforts to raise funds for community projects and local schools, as well as his work in homeless shelters, have been an important part of his cable career.

He continues to manage C-SPAN’s national public affairs relationships with cable TV operators, satellite companies and other multichannel video providers.

JOHN OGREN

In 1976, John Ogren would begin a distinguished cable career as a projectionist, delivering nightly playbacks of Cinevue feature films to pay TV customers of Continental Cablevision in Lansing, Mich.

Many consider his innovative moves in pay-per-view programming to be the forerunner of today’s video-on-demand delivery service. During his formative years at Continental, he designed and built internal company “electronic boards” — a precursor to email.

Armed with a firm knowledge of the cable industry and its potential, he spent 10 years at Harron Communications as regional vice president for its Michigan systems, doubling the company’s size and pioneering its deployment of the yet unknown 18-inch direct-broadcast satellite service.

His long-time fascination with data delivery led to the co-founding of SpeedConnect, one of the nation’s largest broadband wireless companies.

Ogren’s cable career has also meant serving on several cable and wireless industry boards, with his mantra of hard work and preparation serving him well.

MIKE MASON

In 1972, Mike Mason entered the cable business in the same fashion as many of the industry’s early pioneers — installing cable plant and working in myriad disciplines.

For the next 43 years, he would turn those early lessons as plant technician, rebuild manager, operations, system manager and more into a flourishing cable career and a spot in the 2016 class of Pioneers.

Now Comcast’s vice president of technical operations and engineering for the Oregon/Southwest Washington Region, Mason has continued to raise the bar for the industry by freely sharing best practices and mentoring countless young professionals.

His cable pioneering efforts go beyond his work resume, including a lifetime membership in the SCTE, a stint as president of the Montana Cable Association and time as director of several nonprofit organizations in Montana, Oregon and Washington.

BRIAN ROBERTS

Growing his family’s business into a $74.5 billion global media giant, while maneuvering it through myriad pitfalls and fostering a corporate culture of community involvement are among Comcast chairman and CEO Brian Roberts’s credentials for the 2016 class of Pioneers.

Under Roberts’s leadership, Comcast has grown into a Fortune 50 company, uniquely positioning its two primary businesses — Comcast Cable and media company NBCUniversal — at the intersection of media and technology.

His steady guidance has earned him recognition as Fortune magazine’s Business person of the Year and a three-year run atop the cable and satellite sector on the Institutional Investor’s list of America’s Top CEOs.

Since joining Comcast (which his father, Ralph, co-founded) in 1981, his humanitarian efforts have paralleled his industry contributions and earned him numerous awards on that front as well. That spirit of giving back has been a cornerstone of the company’s culture under Roberts.

In addition, Roberts has advocated for the cable industry as chairman and a board member of the National Cable & Telecommunications Association.

Outside of his many industry achievements, the Roberts family has contributed $15 million to the University of Pennsylvania Health System, for the construction of the Roberts Proton Therapy Center, and continues its deep involvement with the city of Philadelphia.

Time Warner, under pressure as activist investors reportedly circle the media giant looking for ways to break it up, didn’t help its case to remain independent as fourth quarter results across all of its divisions came in below expectations.

Time Warner shares fell hard in early trading on the New York Stock Exchange, opening at $56.26 per share, down 12% (6.95 each). The company is scheduled to hold a conference call with analysts to discuss results at 10:39 a.m. By around 11 a.m., during the call with analysts, TWI was up to $60.71, down about 4% from the opening.

(UPDATE FROM THE CALL: TWI, HBO execs call out progress on HBO Now, which has hit 800,000 paying subscribers.)

Overall revenue fell 6% in the fourth quarter to $7.1 billion and adjusted operating income fell 12% to $1.4 billion due to declines at all of the media giant’s operating division. Time Warner did beat consensus estimates on earnings per share-- $1.06 per share versus analysts’ expectations of $1.01 per share – but that was mainly because it paid fewer taxes than expected.

At its Turner networks unit, revenue increased 2% and advertising revenue climbed 5%, but adjusted operating income declined 15% to $781 million, mainly due to a 22% increase in programming expenses. At Home Box Office, revenue increased 6% to $1.4 billion in the quater, but adjusted operating income was flat at $393 million due to programming costs increases and higher marketing and technology expenses associated with its standalone product HBO Now.

In a statement, Time Warner chairman and CEO Jeff Bewkes concentrated on full year results, which were better, with a 3% rise in revenue and a 19% gain in AOI.

“All three of our operating divisions increased revenue and profits while also investing to capitalize on the shift to on-demand viewing and growing worldwide demand for the very best video content,” Bewkes said in the statement.

In a research note, Sanford Bernstein media analyst Todd Juenger wrote that while Time Warner’s results were no surprise – they had basically pre-announced results in January. But how they got there – missing operating income estimates in every segment and beating earnings per share expectations because of a lower tax rate (25% vs. 35% iln the prior year) -- was. 

“This is not a forgiving market environment in general, or for media stocks specifically. We don't think [Time Warner] shares will get a "pass" on a tax beat …,” Juenger wrote

NEW YORK — It wasn’t high art, but as roasts go, the one for Vice Media founder and CEO Shane Smith during a fundraiser for the Center for Communications Nov. 18 briefly showed a different side of the notorious media bad boy, who was given the Center’s Frank Stanton Award for Excellence in Communication.

Stanton was president of CBS from 1946 to 1971, overseeing the network’s Golden Age for journalists like Edward R. Murrow, Walter Cronkite and Dan Rather. Roasts are notoriously di_ cult to do, and not every joke hit its mark — there were a lot about Smith’s weight and prodigious appetites: he reportedly spent $300,000 on a single dinner with friends in Las Vegas during the International CES in January.

But amid the Sex Pistols intro music (Smith’s favorite band) and the steady stream of F-bombs — even from so-called staid TV executives — former Viacom CEO and current Vice board member Tom Freston offered a peek at a side of Smith most don’t see.

Freston got one of the biggest laughs, reading a list of “poignant” late-night texts he supposedly received from Smith. Examples: “You calm down, you Minnesota dust climber!” and “Cross your balls, we’re going in!”

But Freston also read one that Smith sent to him on Nov. 13, while Freston, HBO chief Richard Plepler (also a presenter) and Time Warner Inc. chairman and CEO Jeff Bewkes were having dinner in Paris (they were there for a U2 concert that was later canceled) mere blocks away from the terrorist attacks that night.

“Before we knew what was really going on, I heard a ping and I reached for my iPhone and read this message: ‘F**k dude, get out of there. Come home to me and be safe,’ ” Freston said. “That’s sort of Shane; he’s on all the time.”

— Mike Farrell

Comcast’s Alchin Shares a Coming Out Story at Film Screening

The LGBT community was out in force Nov. 23 for a special Washington, D.C., premiere screening of Comcast’s Focus Features film unit’s The Danish Girl, about Lili Elbe, the first recipient of sexual reassignment surgery.

In attendance were cast members and filmmakers, including director Tom Hooper and co-star Alicia Vikander. Star Eddie Redmayne, who plays Elbe and who won the Best Actor Oscar for Focus’s The Theory of Everything last year, was out of the country, but made apologies via video.

Also on hand at the Burke Theater at the U.S. Navy Memorial were Emmy winner Jeffrey Tambor and Bradley Whitford of Amazon Studios’s Transgender. Tambor also is familiar for a recent DirecTV ad campaign savaging large cable companies.

Introducing Hooper before the film was John Alchin, former co-chief financial officer of Comcast, who noted that the fact he is gay warranted a front-page story in a Philadelphia newspaper two decades ago. He said the reaction from Comcast’s Brian Roberts was, “good,” with him saying Alchin had made the company proud. Alchin said that when he told Brian’s father, Ralph, about his son’s comment, the late Comcast co-founder replied that he wasn’t surprised, as he had taught Brian everything he knew.

Alchin talked about the LGBT community’s progress toward “recognition, equality and inclusion.” But he suggested the fight continues, pointing to Houston, where an anti-discrimination ordinance was recently defeated.

“We still have lots more work to do,” Alchin said.

He also talked about Comcast’s “dedication to featuring diverse and independent voices on film and television” and pointed out that Comcast carries more than 160 independent networks.

Comcast has repeatedly been cited as among the best places to work for LGBT employees by the Human Rights Campaign.

— John Eggerton

A Viacom spokesperson this week confirmed the company is reducing its ad load during primetime. The company has been notorious for stuffing some of its shows with so many ads that it could fit only five half-hour shows into a three-hour programming block.

The move comes as ratings are eroding, partly because of competition with streaming services, many of which are either commercial free or have greatly reduced commercial loads.

Among other programmers, Turner Broadcasting recently announced plans to cut commercial loads on its truTV network next year; Discovery said that with ratings up, it was running fewer commercials on some of its networks; and for two seasons Fox has been running its hit Empire with fewer commercial interruptions.

Viacom CEO Philippe Dauman talked about cutting ad loads during an investor conference in September. Viacom has been working on non-Nielsen metrics to sell advertising as more of its younger viewers watch on non-traditional platforms. The company has introduced products like Viacom Vantage, which is designed to capture viewer engagement on digital, mobile and social platforms. Dauman said Vantage was a major driver of its upfront sales and that those initiatives would be taking effect during the new broadcast season.

“With those kicking in we’ll be in position — we’ve been talking to a lot of advertisers about it, which they like — to reduce ad load in primetime across our networks, which will improve the consumer experience and drive pricing,” Dauman said.

Viacom declined to be more specific about which networks and shows have lower ad loads, or how that’s affecting revenue. He might address the issue during Viacom’s earnings report Thursday (Nov. 12).

According to stats compiled by analyst Todd Juenger of Sanford C. Bernstein, the number of commercial hours in Viacom’s non-kid primetime programming (not including sports and news) rose 1% from a year ago. Viacom reduced the amount of promotion material it runs, so its total commercial and promo hours were down 1% for the quarter. Other media companies, including A+E Networks, Time Warner, 21st Century Fox and the Walt Disney Co. increased commercial hours by more than 2% during the quarter.

On Time Warner Inc.’s earnings call, CEO Jeff Bewkes stressed the importance of improving the consumer experience, and said its networks were looking for opportunities to reduce ad load, as with truTV.

Read more at broadcastingcable.com.

Cord–cutters, shmord-cutters.

The notion that cord-cutting millennials will erode the cable business into oblivion is being turned on its ear, as cable operators across the board are reporting some of their best video-customer results in nearly a decade and their younger, cooler satellite and telco TV counterparts have encountered mounting losses.

The trend continued last week as Cablevision Systems reported better-than-expected results in third-quarter 2015. Cablevision — which has been a victim of its own success and stepped up promotional efforts by telco Verizon Communications — reported a loss of 33,000 basic-video customers, a 10.5% improvement over the 56,000 video customers it lost in the same period in 2014.

Though customers are still leaving, the erosion has slowed. The results build on those of Comcast, Time Warner Cable and Charter Communications, each of which in the past few weeks reported their best basic-video customer improvements in about a decade.

Comcast was first out of the blocks, reporting on Oct. 27 a third-quarter loss of 48,000 video customers, nearly half of what it shed in the same period last year and its best third-quarter performance in nine years. It was followed by Time Warner Cable, which shed just 7,000 basic-video customers (compared to a loss of 184,000 in the prior year), and Charter Communications, which gained 12,000 basic-video customers, its first increase since the fourth quarter of last year and a big improvement over its 9,000-customer loss in Q3 2014.

CABLE HOLDS ITS OWN

And telco-TV providers are no longer taking up the slack for cable losses. In the third quarter, AT&T — which completed its $48.5 billion purchase of satellite giant DirecTV in July — reported a loss of 92,000 U-verse TV subscribers. At the same time, Verizon Communications said its FiOS TV service added 42,000 customers in the third quarter, one-third of the 114,000 it added in the same period last year.

The improvements reveal that even in the face of stiff competition (Cablevision has the greatest exposure to Verizon’s FiOS TV product at 49% of its footprint), cable has managed to hold its own.

The trend of cord-cutting — stopping monthly subscriptions to MVPDs — isn’t over by any means. Collectively, all pay TV providers are still losing customers, and most are expected to do the same in the fourth quarter. What’s new is, cable is gaining share in relation to its telco and satellite rivals.

The results have some analysts wondering if they should rethink the whole cord-cutting concept.

“It is time to ask whether we’ve got the story right,” MoffettNathanson principal and senior analyst Craig Moffett wrote in a recent research note.

But not everyone sees a sea change. Pivotal Research Group CEO and senior media & communications analyst Jeff Wlodarczak said AT&T was likely distracted by its merger with DirecTV — satellite-TV provider DirecTV added 26,000 net new customers in the period, compared with a year-ago loss of 28,000 net customers — and should recover in later quarters. And the practice of “cord-shaving,” or migrating to a less-expensive video package, including basic cable, may explain some of the industry’s performance, he said.

From almost the beginning, cord-cutting was seen as a cable problem, Moffett continued, and investors took solace in the fact that MSOs at least had the broadband business to fall back on, if video revenue were to disappear.

Broadband has played a major role, and cable is by far the dominant provider of that service (in the second quarter, cable accounted for 100% of broadband customer additions, only the second time that has ever occurred).

But cable’s relentless focus on expanding its video-on-demand libraries and lineups, enhancing its user interfaces and beefing up its authenticated TV everywhere offerings and apps have also made it and its much maligned video, voice and data bundle into a more attractive choice.

MORE THAN BROADBAND

“Cable is now unmistakably taking share from satellite, and telco TV is fading fast,” Moffett wrote, adding that broadband deserves some credit for the transformation.

“But some of it owes to fundamental changes in the way we are watching TV,” he added. “Cable’s two-way architecture and Comcast’s best-in-class user interface and VOD libraries are emerging as genuine sources of competitive advantage.”

Comcast’s X1 operating system is seen by many as the gold standard for content navigation. At the recent Next TV Summit in New York, Bank of America Merrill Lynch media analyst Jessica Reif Cohen half-jokingly wished that regulators had approved Comcast’s merger with Time Warner Cable just so New Yorkers could finally experience the X1 interface.

And seamless navigation is becoming critical to cable operators’ survival. Clunky text-only, scrolling interfaces offered by many providers are now met with derision by customers who find their smartphones are much more intuitive.

With new sources of traditional shows and short-form content emerging practically every day, finding an elegant way to choose entertainment has become a priority not only for consumers but for the content providers as well.

Last week during the company’s earnings conference call, The Walt Disney Co. chairman and CEO Bob Iger listed his top three essential elements for media success. No. 2, in between high-quality programming and mobility, was creating a “fantastic user experience with incredible interface navigation.”

“You have to make the service easy to use and the content easy to find,” Iger said.

CLOSING THE WINDOWS

Other programmers are getting into the act as well. Last week Time Warner Inc. chairman and CEO Jeff Bewkes said the programmer is evaluating whether to retain its content rights for longer periods or even “forgo or delay certain content licensing,” which would essentially push windows for online subscription video-on-demand services such as Netflix closer to those for syndication.

SVOD licensing generally brings in less revenue than traditional licensing through cable, satellite and telco operators, Bewkes said, and has no advertising revenue attached.

“We think a lot about how to enhance the value of the traditional pay TV bundle and it’s something we’re obviously looking at [with] our networks,” Bewkes said.

In a note to clients, Sanford Bernstein media analyst Todd Juenger praised Time Warner Inc.’s moves, adding that they won’t be effective unless other programmers follow suit.

“It’s also very important, we think, not to just curtail SVOD licensing,” Juenger wrote. “It’s equally important what you choose to do with the content instead. We think the best answer is: Put it on cable/satellite VOD, as part of the bundle.”

The bundle — thought not too long ago to be the reason for high cable prices by forcing customers to pay for channels they don’t watch — is increasingly becoming the more attractive alternative to over-the-top video offerings like Sling TV, Sony’s PlayStation Vue and others. In a research note, RBC Capital Markets media analyst David Bank wrote that when higher charges for standalone broadband service and limited choices for programming are considered, the cable bundle is still the best value.

“A household could save more money forgoing two bottles of wine in a month rather than replacing traditional cable TV with an OTT-based lighter bundle,” Bank wrote.

While Wlodarczak isn’t convinced that cord-cutting or cord-shaving is easing up, he believes cable will continue to improve its results in the fourth quarter. Charter will add about 30,000 video customers in Q4, he predicted, ending the year on a positive note, while Time Warner Cable and Comcast should be flat and Cablevision will lose about 30,000 over the same timeframe.

“I think it is too early to make the call that cordshaving needs to be rethought,” Wlodarczak said. “I think it is here to stay, but as I have noted in the past, I think it will be likely more contained than most media investors seem to be pricing in — one-to two percentage points of decline driven mostly by the fact that pay TV is increasingly too expensive.”

The turnaround in the cable business hasn’t been a one-quarter phenomenon. The turn in the tide for cable-subscriber losses started four years ago, with Comcast in 2011. Since then, the nation’s largest cable operator has reported basic video-subscriber improvements in 14 of the past 15 consecutive quarters, reducing losses by a staggering 83%.

At the same time, No. 2 U.S. operator Time Warner Cable, after a dark period in 2013, has turned around its operations. TWC reported improved basic video subscriber results in the past six consecutive quarters.

Charter, which reported positive quarterly subscriber growth four times in the past two years — 20,000 in Q1 2012; 18,000 in Q1 2014; 3,000 in Q4 2014; and 12,000 in Q3 of this year — is continuing on that path and, along with TWC, has estimated that it will report positive basic-video customer growth this year.

RIVALS TRENDING DOWNWARD

While cable has shown consistent improvement, telcos and satellite providers have been mired in an opposing trend. Once the main growth engines for the pay TV sector, AT&T and Verizon have seen their TV-subscriber growth dwindle in the past two years.

AT&T added 924,000 U-verse TV customers in 2013 and 680,000 in 2014, but in the first nine months of 2015, that growth has dissipated to a loss of 64,000 customers.

Growth at Verizon — which did not close a megamerger this year — has also slowed down. The telco added 536,000 FiOS TV customers in 2013 and 387,000 in 2014. So far this year, the telco has added 158,000 FiOS TV customers.

On the satellite side, Dish Network — which is scheduled to release third-quarter results on Nov. 9 — has struggled with subscriber losses, shedding 79,000 net subscribers in 2014. In the first half of this year, Dish has lost a total of 215,000 net customers.

All of this seems to bode well for the cable industry.

“Cable’s improvement in basic video looks sustainable,” Moffett wrote.

A day after its Home Box Office announced more detailed plans for its long-awaited direct-to-consumer offering dubbed HBO Now, Time Warner chairman and CEO Jeff Bewkes said partnering with Apple TV on the product will help “elevate” it in the eyes of consumers.

HBO first announced its plans for an over-the-top version of the product in October. At an Apple news event  in Cupertino, Calif., yesterday, HBO chairman Richard Plepler said the OTT product -- HBO Now – would be first available exclusively for three months to customers of Apple TV. Apple said it has sold about 25 million Apple TV devices to date, but that could grow as the company said it will reduce the price of the device from $99 to $69.

At the Deutsche Bank Media, Internet & Telecom conference in Palm Beach, Fla., Bewkes said Apple was selected for its marketing prowess and its standing among young consumers.

“They [Apple] are so good, they’re so energetic at marketing, they have such a strong position in global users, all those connected devices, the marketing and retail communication they have with hundreds of millions of people,” Bewkes said at the conference. “We thought that was a good partner to elevate HBO Now and get the value of HBO out there. ”

HBO Now is targeted initially at the 10 million broadband only homes across the country (5 million of whom have some kind of content subscription), but Bewkes said the goal is to capture customers beyond that group. As in the past, he pointed to the 70 million pay TV homes without an HBO subscription, of which he said 10 million to 15 million are primary candidates for premium channels like HBO.

 “It’s clear this is a product that can enjoy much more viewership and loyalty if it was offered well and promoted correctly,” Bewkes said.

While some distributors – particularly smaller ones – have griped that HBO Now could cannibalize their customer base, Bewkes said their reaction for the most part has been favorable for the product.

“Mostly there is excitement and the realization of our distributors that all of us together have to go further in VOD packages and marketing, including broadband only for those that want to do that,” Bewkes said. “If you’re weighting it by subs and money, most of our distributors are on board with us and they are going to push it. We have some that think that it is competitive with them and that they wish that they could have maintained the sole place to get HBO. But we’ve been telling them for quite a while, that they have to get ready so they have the capability to offer this on VOD and offer this on broadband. We think that we’ve done what we can and we will continue to that.”

He added that he believes that even those critics “will come around because it’s in their interest to take this powerful product and sell it in every way that their consumers want to get it. They simply have to be more vigorous about it.”

Time Warner reported lower fourth-quarter earnings because of restructuring and programming charges.

Net income was $718 million, or 84 cents a share, down 27% from $983 million, or $.106 cents a share, a year ago. Excluding programming charges at Turner and restructuring and severance charges, adjusted EPS would have been $1.14 compared to $1.07 a year ago.

Revenues fell 1% to %7.5 million.

The earnings beat lowered Wall Street expectations while revenues lagged most forecasts. Time Warner also moved to please investors by increasing its quarterly dividend by 10% to 35 cents a share.

Time Warner said that for 2015, it expected adjusted diluted income per common share from continuing operations to be between $4.60 and $4.70.  Adjusted earnings per share were $4.15 for 2014, up 18%.

“We had another very successful year in 2014, with solid revenue growth and robust 18% Adjusted EPS growth – our sixth consecutive year of at least high teens Adjusted EPS growth,” CEO Jeff Bewkes said in a statement. “Our financial performance reflects the strength of our position as the world’s leading video content company.”

At Turner, adjusted operating income rose 5% to $921 million despite $44 million in charges for programming it will stop airing and $26 million in restructuring and severance charges.

Revenue rose 2% to $2.6 billion. Subscription revenues were up 5%, hurt a bit by Turner’s carriage dispute with Dish Network. Advertising revenues were down 1%. Ad revenue at Turner’s domestic entertainment networks was down because of lower ratings and fewer baseball playoff games. Ad revenues were up at CNN and Turner’s international networks.

For HBO fourth-quarter operating income declined 4% to $394 million because of higher programming, distribution and marketing costs. Programming costs were up 15%. Revenues rose 6% to $1.3 billion.

Last year, when Rupert Murdoch’s 21st Century Fox launched an $80 billion hostile takeover bid for Time Warner Inc., chairman and CEO Jeff Bewkes had a simple response: We can do better on our own.

So far, Bewkes and his team have delivered on all counts. In November, Time Warner stock surpassed Murdoch’s $85-per-share bid and, as of Dec. 15, has outperformed every other company in the programming sector, up 22% for the year.

Time Warner didn’t get to this point by making any big acquisitions, nor did Bewkes feel as if the company needed to do so. But his moves to streamline and focus the media behemoth over the past several years have literally changed the game and the landscape for Time Warner and other programmers.

Time Warner’s spinoff of AOL and Time Warner Cable in 2009 and its spin of magazine publisher Time Inc. in 2014 helped transform the parent into a pure-play content company. The move focused Time Warner on its core assets — Warner Bros., the world’s largest movie studio; Turner Broadcasting System, home of iconic channels like TNT, TBS, and CNN; and production arm Warner Bros. Television Group, which has churned out hits for cable and broadcast networks alike.

A revamp of Turner — including laying off about 1,500 workers — is expected to lead the programming juggernaut headfirst into the world of original programming, doubling its content budget to $1 billion by 2018. Bewkes also has embraced technology and new business models — HBO is slated to launch its over-the-top product early next year.

But Bewkes, Multichannel News’s 2014 Executive of the Year, is at heart a cheerleader for the industry to which he has devoted the bulk of his business life. An early proponent of the TV Everywhere concept, the Time Warner chief sees ubiquitous on-demand content available to every subscriber everywhere, on any device and at any time as essential to the future of the industry. And he is willing to put his own content and business on the line to get there.

“It’s time to invest, and we’re going to put our money where our mouth is,” Bewkes said during a recent interview with editor in chief Mark Robichaux and senior finance editor Mike Farrell in his office in the Time Warner Center in New York. An edited transcript follows.

MCN: As you look over the year, a lot of things have happened. How do you think you’ve come out on the other side?

Jeff Bewkes: It was a good year.

MCN: You sound like Frank Sinatra.

JB: It was a very good year. We’ve grown the company 25% a year in terms of earnings per share growth over the last six years. And then [there are] the future prospects of the company. That comes from two things — one is the tremendous buoyancy, health and growth of the television industry globally, essentially the explosion of video and how good it is and how much people like to watch it. And the second is, Time Warner now has the most focused company in terms of video, and we have the biggest scale and the most momentum creatively and financially.

That’s why when we look out and we say we’re [estimating] $4 per share of earnings this year; close to $6 in two years and $8 in 2018 — doubling the earnings of the company — put that together with our position in the video business and add it to our track record, and that’s why it shouldn’t be a surprise to anybody that the stock is already in the [$80 range].

We’ve publicly said [that] our growth is going to go up dramatically in the next few years even from these levels.

MCN: But do you think you need a big, game-changing transaction?

JB: No, no. Obviously we don’t. Look at what we’ve done. We’ve given very detailed projections of our business at Warner Bros., at Turner, at HBO, at CNN for the next five years. Clearly, we have gotten to a place that is very advantageous in terms of being focused on the video business that we think is such a great opportunity and having the biggest scale in the business already.

Let’s just go through Time Warner. We have the biggest film studio in the world by slate and distribution. We have the most extensive slate of franchises going out for five years, I think, than any film company has ever put forward.

The other equally large piece of Warner Bros., it’s also the world’s biggest producer of television series and it’s the biggest supplier to all broadcast networks in the United States. And we have the leading supplier relationship with Fox, CBS, NBC and ABC. We’re their No. 1 partner outside of their own production entities.

MCN: Some people might say that Jeff Bewkes hasn’t made a big, game-changing acquisition.

JB: I disagree with the premise. We’ve done numerous game-changing transactions. How about game-changing divestitures? We divested the biggest distribution company that anybody has ever divested and we got the biggest increase in value both at Time Warner Cable and at Time Warner [Inc.].

And by the way, you don’t need a merger from Time Warner Cable to Comcast to get to that value. That company on its own — before the Comcast merger, whether it goes through or not — is the highest gain in stock value of any distribution company in the last six years. Time Warner has itself the highest gain in earnings, in terms of compound growth, and the highest increase in stock value of any large media company as well. So that’s a game-changer.

We took AOL, put it out, and AOL stands very well in terms of how it’s done when it was on its own. Time Inc., the publishing company, is now the world’s biggest independent, publicly traded publishing company. We think it’s in a great position, the stock has done very well, the earnings are on track. So we think those are all game-changers.

I think the idea that the bold things you can do in media come from mergers is wrong. I think the bold thing to do in media is build companies. We have done it by inventing CNN, inventing HBO, inventing TBS, TNT. In the last 10 years, we invented the most successful network [for] 18-34 [year-olds] in the United States, Adult Swim. It’s a huge creative breakthrough network. It’s got the leading numbers among the group. It’s a lot more important that we invented Adult Swim than had we bought The Weather Channel or some other acquisition. I think to focus on acquisitions as though it takes boldness; it doesn’t take boldness to do acquisitions. That’s ridiculous to say that.

MCN: Right now in the industry, there is a debate as to whether we are in a cyclical downturn in ratings because of various factors like technology and measurement, or if are we on the precipice of a big, long decline in TV ratings.

JB: Well, in general, the answer to what will happen in ratings for all of the cable networks depends on what they do. And that’s two things — one is, how good and engaging is the programming, and two, is the programming offered on-demand in a way where the audience, including the younger audience, gets to see what they want and have the control over it so they can see their favorite show on their favorite device, in the time and in the place they want to see it?

It’s not that they [audiences] don’t like the programming that’s on USA and TNT and all the cable channels, it’s that they want it delivered on-demand on a device and method and interface that they can use easily.

We’ve been saying this for a long time, and you can see it in the numbers right now. If you take [TNT’s] The Last Ship, a show that premiered this summer and was a pretty good hit at Turner, and you look at the ratings in subsequent video-on-demand plays, [the ratings are] like two to three times the audience of the first play.

If you look at Game of Thrones or some of the big shows on HBO, you have three-quarters of the audience on VOD. If you look at all the shows and the viewing on subscription VOD broadband-delivered platforms like Amazon and Netflix, most of that viewing is for shows that were on some cable network or broadcast network.

MCN: The networks can’t monetize that as well as TV ratings.

JB: But the point here is … is there some secular increase or decline in the viewing of this television program? And the answer is, it’s going up, not down. If the viewing is going to VOD on broadband it’s still that programming. There is still the interest in that programming. The question is, where is the VOD programming — is it on Hulu Plus, is it on Netflix, where is it?

The answer for every entity out there, whether it’s Netflix or TNT, is it has to be on-demand and it has to have an interface where you can find it and you can use it on whichever device you choose to use it on.

So this is Multichannel News. It couldn’t be the better place for people whose lives have been devoted to this. The important thing is that the programming, all the shows that all of our multichannel companies are making, have never been more popular; they have never had a bigger opportunity in front of them, not just in America but all over the world.

And the thing that has to get done is, it all has to go on-demand. And it has to go on-demand with an interface that can help you, as a viewer, understand and stay attached to the network that brings you your favorite show.

MCN: You were forced to make some painful cuts at Turner. Are you happy with what’s going on there now?

JB: I am happy with all of it. I’m glad you asked that. We put in new management at every one of our companies, whether it’s Richard [Plepler] at HBO or Kevin [Tsujihara] at Warner’s or John [Martin] at Turner. They’ve all known each other for many years. They have all liked each other for many years, they’ve worked together cooperatively for a long, long time. I’ve known all of them for 20 years, and I know how they work, how they work with each other. We have a company now that likes working together, that knows which things they ought to do together and which things they should not.

MCN: HBO made some headlines a few months ago with the announcement of their over-the-top-product, which will be launched with the help of your distribution partners. Does that dilute your control?

JB: What we’re going to do is try to help our distribution partners, but we don’t view that as putting a constraint on us.

We’ve got to find ways to offer HBO — which has always been an a la carte, individual choice — and we want to make it available to all the households. Let’s start with the United States. We don’t want to undermine our current distribution arrangement. We don’t think that is necessary; we don’t think it’s in the interest of consumers to undermine that.

But if we go for a more vigorous offering of HBO, which essentially tries to make HBO video-on-demand, the most powerful version of HBO, available with the best interface to every household in the United States, that doesn’t have to undermine distributors. It’s actually the most powerful marketing bid they can have to further make their video plant and their broadband plant more sustainable and more profitable.

We’re just trying to get everyone to be more robust in doing it and we said very clearly when we announced this change, the real attention should go to the 70 million basic-only subs. They are very strong supporters of the 100-plus channel package.

And from what we can see, looking at all kinds of research, there’s about 15 million at least of the 70 million who are exactly the same in terms of their interest, their geographic location, everything about what they do, they ought to have HBO; they’re natural subscribers for it. They either haven’t been offered it in a way that they’ve found reasonable or they were offered it in a way that was hard to understand, they couldn’t sign up, it had all those things attached to it. And we’re saying look, you ought to offer it to these people because there is a profit in doing that. That’s where the biggest opportunity is.

Now the idea that because they also can get HBO, that maybe they’re going to disconnect the hundreds of channels that they have obviously decided to buy? I don’t think so.

MCN: It makes you wonder if there’s not a natural ceiling on these over-the-top services.

JB: There is not that much indication that there’s a dissatisfaction out in the population with the basic-cable bundle. In fact, it’s a very successful thing. And if you go around the world, not just the United States, you see the same thing. You see ever-higher trends of penetration of multichannel packages.

Everybody wonders, is that somehow going to get impinged on by some over-the-top or broadband thing? That’s not the question. Is it going to be impinged on by video-on-demand if they don’t offer it? And the answer is, what people want is VOD. And they want VOD on the device that they choose.

MCN: And yet a lot of them don’t know that they’ve got that right. How would you rate the industry’s efforts on that front?

JB: It takes no boldness to go merge some company with another company and when the merger is done, nothing has changed. What would take a little boldness is for networks to go out, get the rights and offer their channels on-demand. That would take a little vision and foresight for distributors to take those VOD products that have been offered and make them available to and market them reasonably and put some effort behind it.

MCN: Is TV Everywhere happening fast enough in the industry?

JB: No, obviously, it’s not happening fast enough. It’s really necessary that it happens faster and that the interfaces get better. Every distributor ought to be harnessing multiple sources of consumer interfaces. And I know that the legitimate concern is that somehow the providers, let’s say they’re tech companies that give assistance on these interfaces, might somehow find a way to get into some unholy position with regard to the distributor’s rightful relationship with the customer. But come on, there ought to be a way to do this.

MCN: Do you have an official line on the Comcast-Time Warner Cable merger?

JB: If the theory is that more and more video viewers and video content are going to go over broadband, and its currently 10%, as soon as it goes to 20%, it just fully puts traffic on every road and now you’ve got to tack down the broadband system.

How is that broadband plant going to continue to have capital investment for the capacity and the interface that needs to deliver what the consumers are going to demand? It’s got to continue to have competition, returns, capital investment, in order to do that job. And that’s the context in which you have to look at the regulatory review of not just that merger, but everything else, whether it’s net-neutrality policy or all these things.

Consumers ought to have a choice that’s a realistic choice of broadband and video providers. It ought to be a robust set of choices. And that competition ought to be in a way where that industry has enough returns to get the capital to build the 21st century infrastructure that the United States needs to have.

MCN: Some see recent over-the-top offerings as a way for operators to finally break the programming bundle …

JB: From a consumer point of view, consumers don’t want to be offered a set of video channels that is designed by virtue of what channels are owned by [this] company versus [that] company. They want to be offered channels that make sense to them.

When you are offered a bundle of channels that have fewer channels than the larger bundle, are you saving money somehow by doing that? Usually the answer is no.

When you go to us, our channels — TNT, TBS, CNN, Turner Classic Movies, HBO, Cinemax, truTV, Adult Swim — they are all must-carry channels. They are all channels of great interest in very important genres that consumers like. We don’t have any marginal channels. Nor are we planning to put a sub bundle of channels we happen to own into distribution, broadband-only. We don’t see how that’s necessary.

The bundle is a great deal and consumers like it because your wife and your kid and you all like different channels that are in the bundle. And the economics of having all of them there are better than what the economics will be for you as a viewer if you had a subset.

The possible question that might be an exception to that is the sports part, because it’s quite expensive for a highly concentrated part of the bundle that we all know some of the viewers don’t watch.

MCN: What’s the likelihood of that happening?

JB: I don’t know. We’ve got some great and powerful sports, [the] NCAA [men’s college basketball tournament], NBA and MLB, on our Turner channels. We think they perform well on our channels — the ratings are better when they’re on our channels than some of the other channels that they appear on. We have not made any of our channels full sports channels. You wouldn’t say CBS or NBC are sports channels, although you had a decent component of sports on [those] channels.

The takeaway is, consumer demand for video is going up all over the world, not just in the United States. And the reason that’s important is there’s a fair amount of the consumer demand for that video finds its way to the U.S. and English-language production. We have a lot of not-U.S.-produced and not-English language production too. That’s a growth area for us.

But it’s just a very good thing to see a demand for TV and video. It then leads to more resources — money, talent, producers, directors, writers, actors — into that field of TV production to make ever better stuff. We’ve all seen it. You can see it every night on TV. And then third, which is great and somehow we’ve all turned it into a problem, having that ever-better programming be available on video-on-demand makes it that much more powerful and it gives you that much more opportunity to make even more distinctive programming.

MCN: I think there’s a recognition that this is the golden age of television.

JB: It really is. The quality is there. Think of the profitability of all the TV network companies. They are all great, they’re all healthy. That means investment continues, the talent coming in continues, the technological developments are making it much more powerful with VOD and mobile access. That’s all good.

And the economics, once we create the VOD platform for the industry, the economics are fantastic because it’s all fixed cost and with an industry that’s got 90% penetration of its basic product.

This is all good and everybody ought to just remember that. It’s time to invest and we’re going to put our money where our mouth is.

He was joking when he said it, but there is a grain of truth in that statement, made as Time Warner’s investor day meeting drew to a close. For about four hours at its Manhattan headquarters Bewkes and his top executives – Turner Broadcasting System chairman and CEO John Martin, HBO chairman and CEO Richard Pepler, Warner Bros. Entertainment chairman and CEO Kevin Tsujihara  and chief financial officer Howard Averill walked shareholders and analysts through a series of presentations geared toward calming their fears of the present and giving them hope for the future.

Bewkes started off the meeting by reminding investors of the past – Time Warner has grown earnings per share at a faster pace in the past five years than the S&P 500 Index and since 2009 has returned $25 billion in dividends and stock buybacks to shareholders while investing $75 billion in the business – and showing them a glimpse of the future – he pledged that EPS would double over the next several years.

Bewkes has been under pressure to show that Time Warner can stand on its own since his board rejected 21st Century Fox’s $80 billion unsolicited offer back in July. While he and the rest of his team have a ways to go before they can definitively prove that, the meeting seemed to show that the company was at least paying attention and is making moves to right the ship.

At Turner, which has been rocked by poor ratings and a sense that its steady stream of Big Bang Theory reruns aren’t resonating with viewers anymore, Martin said that the programmer will double its original programming budget to $1 billion annually by 2018. That, coupled with a streamlining and cost efficiency program dubbed Turner 2020 – which will involve laying off nearly 1,500 workers – will put the programmer back on track.

 On the ratings front, Martin blamed some of the softness on broadband-only homes being included in the ratings mix, increased video on demand usage and a rise in online and mobile viewing. For example, Martin said that Turner’s The Last Ship, a ratings hit over the summer, saw a recent decline as viewers began catching up with the series on VOD.  Online, PC and mobile viewing also increased in the period, which affected TV ratings.

“We’re working hard with Nielsen,” Martin said adding that he was confident that any ratings measurement issues could be cleared up.

Martin also pledged to step up consumer products sales, licensing and merchandising on the kids’ front. He noted that Turner derives about 5% of total kids’ revenue from consumer products, licensing and merchandising , while other similar channels get more than half their revenue from those sources. Martin said Turner will take a collaborative approach – its Boomerang channel for instance will be the flanker network around the world for Cartoon Network. And he said Turner and Warner Bros., owners of such iconic brands as Looney Tunes, will approach the kids market as one company.

“We’re making a concerted effort on building global franchises with global characters,” Martin said.

While Plepler’s announcement that HBO will go over the top next year took most of the attention, he added that HBO and sister premium channel Cinemax  are having their best year in more than a decade – the 2.5 million subscriber added so far this year are putting the channels on their biggest growth path in 18 years.

Warner Bros. chief Tsujihara outlined new movie slates heavy with DC comic book characters – The Justice League, Aquaman, Shazam, the Flash, Green Lantern and Wonder Woman all will headline their own films between 2017 and 2020 – and three movies between 2016 and 2020 from Harry Potter author J.K. Rowling’s Fantastic Beasts series.

Investors seemed pleased  – the stock was up about 4% in early trading and closed at $72.21 each, up 2.2% on a day when the Dow dropped 400 points earlier in the day – it too rebounded later in the day to close down about 173 points. Now it’s up to shareholders to decide whether there is reason to worry or not.

Bewkes used the words "up until now" and Moonves said "absolutely" in discussing their considerations for selling premium channels content directly as a streaming video service. Such streams would presumably offer an alternative to pay TV channels within a cable or satellite TV subscription. Neither CEO cited details or timetables, but their terse acknowledgements suggest that they are accelerating their consideration of streaming plans.

To be fair, Bewkes and Moonves, like all other top media executives, must be evaluating alternative distribution options all the time. Their separate, coincidental references at the high-profile Goldman Sachs annual event can be seen as simple acknowledgement of their duties to examine and revise their businesses in the context of shifting market situations - in this case, the migration to streamed, on-demand entertainment.

Yet their sparse words resonate with media interests who are pushing for cable-trimming options.  Clearly, HBO and Showtime are in no position now to reveal publicly any plans, which might include separating each network's original productions from the full slate of movies and programs that could be available in a streamed service. The rights issues alone will take years of negotiations.

In full context, Bewkes said "the broadband-only opportunity up until now wasn't [viable.]"  Moonves rhetorically asked if he'd consider streaming Showtime; his "Absolutely" response was an implied "yes" within "I don’t know when the timing is right. It’s very exciting."  Moonves also discussed the prospect of streaming "a Showtime channel in the future ... all over the world.” 

Bewkes devoted more of his Communicopia remarks to doubling the original content carried on Time Warner's Turner channels, which would also create an inventory of new shows for future broadband streams. He did riff about the opportunities for expanding HBO Go, the current "TV Everywhere" service that authenticated subscribers can stream to their digital devices.  Observers at the conference perceived that Bewkes' attitude toward direct-to-viewer services was more cordial than in his remarks at last year's event.

While the few words with their vague signals of streaming intent are a long way from actual implementation, the very recognition of the opportunity marks an important benchmark in producers/programmers/distributors' migration toward direct streaming.  The impact on affiliates is a topic worthy of many, many more words.

Inevitably, barrels of words will be forthcoming about these options.  But no one know exactly when.

 =========================

Media analyst Gary Arlen recalls an industry conference a few years ago at which he predicted that HBO would stream its content directly to broadband viewers, and a top HBO executive on the panel responded, "Never." GArlen@arlencom.com

TNT has ordered a 10-episode, third season of unscripted crime series Cold Justice. The network plans to launch the new campaign early next year.

Currently in its extended second season, Cold Justice, tracking a former prosecutor and ex-crime scene investigator as they trek the nation to resolve unsolved murder cases, has averaged 2.3 million total viewers, gauged on Nielsen live-plus-seven ratings. TNT extend the show's second season into the summer by ordering six additional installments.

TNT, whose performance had been questioned by Time Warner CEO Jeff Bewkes, is ad-supported cable's top performer this summer. The service won the primetime ratings in July, behind returning series Major Crimes and Rizzoli & Isles, as well as the launch of The Last Ship.

Time Warner reported higher first quarter net income on gains from The Lego Movie, plus gains at its TV properties.

Net income rose 71% $1.292 billion, or $1.42 a share, in the first quarter from $754 million, or 80 cents a share, a year ago. Revenue rose 9% to $7.5 billion.

Excluding Time Inc., the magazine division Time Warner is spinning off, adjusted operating income grew 12% and adjusted earnings per share were up 20%.

“We are off to a very strong start in 2014, with results that demonstrate both the returns we can achieve on our investments in great storytelling and the growth potential of our businesses,” Jeff Bewkes, CEO, said in a statement. “Turner also made history by bringing the NCAA Men’s Basketball Final Four to cable for the first time ever. The success of the NCAA Tournament also helped TBS maintain its position as ad-supported cable’s number on network in primetime among adults 18 to 34 and 18 to 49. It also showcased the importance and vibrancy of our TV Everywhere initiatives, with a more than 40 percent increase in streams for our March Madness Live service over last year.”

Bewkes also pointed to Adult Swim, "which again finished the quarter as the number one ad-supported cable network in total day for adults 18 to 34. And CNN reaffirmed that it is the place the world goes for authoritative coverage during major news events, with delivery in its key demographic up over 50% in March.”

Time Warner also updated its full-year outlook excluding the results from Time Inc. The company said it expected adjusted diluted income per common share from continuing operations to be in the low teens from last year’s $3.51 per share.

Operating income at Turner rose 6% to $900 million in the quarter, including a $13 million gain from the sale of Zite.

Turner’s revenue rose 5% to $2.6 billion. Subscription revenue was up 7% while content revenues were down 15%.

Ad revenues were up 5% as gains at Turner’s domestic networks were offset by foreign currency changes.  The ad sales increase was mainly due to having more of the NCAA Men’s Basketball Championship.

Programming costs grew 9% reflecting the higher costs from March Madness plus an increase in original programming costs.

HBO’s operating income increased 11% to $464 million. Revenues rose 9%, with an 8% increase in subscription revenues and a 13% gain in content revenues. Domestic sub rates were higher in the quarter and home video revenues from season three of Game of Thrones boosted content revenues.

Warner Brothers operating income increased 40% and its revenues rose 14% led by the release of The Lego Movie.

The company said it repurchased 20 million of its share for $1.3 billion this year through April 25.

According to documents filed by Time Warner with the SEC, Bewkes’ salary was unchanged at $2 million, but his option awards jumped to $7.842 million from $2.96 million a year agok, helping to boost Bewkes’ payday.

John Martin, now CEO of Time Warner’s Turner Broadcasting unit, earned $12.7 million as CFO of the parent company.

PR executive Gary Ginsberg was paid more than $4 million, according to the documents.