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Bruce Rosenblum:Maintaining HisIndependent Streak

With more than 45 TV series on the air in the current season— between shows on all the big four broadcast networks (plus, of course, its co-owned The CW), cable, first-run syndication and animation —Warner Bros. Television Group is a gigantic force in television. Overseeing it all as president of WBTVG, Bruce Rosenblum has plenty under his purview. But the executive, who in 2010 also was named to the office of the president of Warner Bros. Entertainment, just went and got himself yet another job. A volunteer gig. He recently was elected chairman/ CEO of the Academy of Television Arts & Sciences.

As he prepares to headline a Super Session Q&A with B&C executive editor Melissa Grego at the NAB Show on April 17, Rosenblum spoke with Grego about whether Warner Bros. will get into originals with Netflix, the chances of Time Warner taking its hot-and-heavy relationship with CBS to the next level and why what he calls the “SVOD window” very well may be the next big thing in TV. An edited transcript follows.

Let’s talk about The CW and the recent distribution deals Warner Bros. and CBS made for network content—with Netflix and Hulu in particular. How do they complement each other, along with your own site,

When you look at this from a big-picture standpoint, what CBS and Warner Bros. accomplished was a re-engineering of windowing for our CW television series. With Hulu as our in-season partner and Netflix as our out-of-season—and ultimately our syndication—partner, The CW has broadened its ability to deliver the compelling content that we produce to a wider audience.

At the same time, we’ve enabled the network to generate meaningful incremental revenue that will benefit the network and creative community and also the affiliates of our network. The intent of Warner Bros. and CBS is to reinvest the incremental revenue into the programming. As we expand the awareness of our content, we fully expect the ratings on the network will strengthen, along with the viewing of our content in on-demand environments like, Hulu and, ultimately, Netflix.

What do the numbers from Netflix and Hulu tell you so far about the impact on viewership—good, bad or otherwise?

The most relevant data we have is that neither the Hulu exposure in-season, nor the Netflix exposure of prior-season episodes, has diminished our viewing. And in fact, on many of our shows our viewing has increased. We’re not able to attribute positive or negative impact at this point with respect to on-air ratings.

20th Century Fox TV is doing new Arrested Development episodes with Netflix. They talked about Terra Nova. Is Warner Bros. likely to announce an original show for Netflix in 2012?

As a supplier of content, new buyers of original content is a good thing. If Netflix or Hulu or Amazon find themselves in a place where they are able to build a business model to support the creation of original content, we would welcome that as a studio.

We have had conversations about producing original content for on-demand platforms. It’s reasonable to assume that at some point in the not-too-distant future we will engage in more concrete discussions about a specific process.

Do you see that as more likely being a revival or new show?

It’s unclear at this point what the business model looks like. It’s unclear how these episodic series would travel internationally. So once we work through the vetting of the business model, it shouldn’t be too difficult to find creative properties that work for both the studio and the on-demand platforms— whether those properties are revivals of busted series, previously successful series or brand-new creative endeavors. That is to be determined by Peter Roth [Warner Bros Television president] and his exceptional development team and the creative executives at the on-demand services.

What we need to look at from a studio standpoint is, how does the business model work and is this a prudent use of all of our business and creative resources? Our expectation is that we will be able to work through and find a business model that works for everyone. We would hope that these on-demand services evolve to a point where they can support original episodic content. That’s good news for all of us.

Are subscription video on demand (SVOD) outlets more part of the thinking, the options, this year as the networks are making renewal and cancellation decisions? Fringe, with its mythology and cult following, seems like something that might be a candidate for one of these outlets if it loses its network. If Fox cuts it, will you consider shopping it to Netflix—or Amazon or some other SVOD alternative?

I don’t think it’s appropriate to discuss any one individual show, and at this point it doesn’t look like the appetite of on-demand services is expansive enough to cover a whole host of shows. One of the good things about the on-demand services is they’re not wedded to a traditional development cycle. So when you think about this “development season,” that’s not really an applicable phrase for an on-demand service. They can develop and order original content outside of the traditional upfront week. Therefore, I wouldn’t expect that their creative process would evolve around a May decision.

It kind of reminds me though of when the entertainment cable networks were starting to fire up originals and would sniff around when things got cancelled.

That’s one way to look at it. The other way to think about it is when Showtime and HBO moved into original programming, it was thought of as different kind of episodic series, both from a pricing standpoint and from a quality standpoint as well. You can think about them as potentially a new market for episodic content along the lines of pay television, or a new market for episodic content along the lines of how basic cable developed or as any of the broadcast networks developed.

It’s a clean slate for them to begin to think about original content with their appetite from a business and creative standpoint. The nice thing for all of us to be able to watch is there really aren’t any rules, whether you’re at Netflix, Hulu, Amazon or one of the others that may have evolved. They can establish their appetite as they deem appropriate.

How important are those deals for the health and future of The CW?

The Netflix and Hulu deals were very important in securing the financial stability for the network for the foreseeable future.

So what happens if Netflix starts bouncing checks?

We fully expect that Netflix will thrive over the next handful of years. There is no concern on our part of, as you say, Netflix’s checks bouncing.

I can’t tell you what will happen over the next 12 months. But we can all reasonably project that over the next decade, this business model will evolve to a point where there’s a competitive and efficient business model that has created a new window or buyer for episodic storytelling. That’s what is good news for us.

Put aside the broadcast networks, which are very healthy today. Put aside the ability to distribute our content efficiently from an international standpoint, which is growing. What’s really going to happen over the next 10 years is this SVOD window. This SVOD business will evolve to a place where the names will change, there will be various cycles of ups and downs, but over the next 10 years it will evolve to a place of equilibrium where the business model will work and where there will be increased value for the episodic stories that we all produce.

Who participates in that increased value, and how the local stations, basic cable and broadcast networks will participate, that all is yet to be determined. That’s where the next 10 years of evolution will be fun to watch. All of those players—the studios, networks, MSOs and satellite providers, advertisers—everybody will have a say in how this evolves.

But however the SVOD environment evolves, it will be good news for companies like ours, which are in the business of producing episodic content. Anytime you own a library of content, like we do and like CBS and Twentieth Television do, new buyers for those libraries of assets only serve to increase the value of those libraries.

How is first-run syndication faring in the new world order of digital and on-demand viewing?

It is more challenging today than it has been in my 25-year journey to successfully launch a new first-run strip show. The consolidation in the station business over the past decade, along with a desire for those vertically aligned companies to produce more content in-house, has created a greater scarcity of available time periods. As you know, the business model for local stations has been tough, so the ability for them to pay cash license fees has diminished. Overall the ratings in daytime have declined and shifted to basic cable. The two primary revenue streams—cash and barter—are tougher to come by than they were five or six years ago.

Having said that, when you have the good fortune of getting a first-run syndicated show to work, like Ellen, Judge Mathis or People’s Court for our company— there are several examples at other companies—it’s still a lucrative business. The lifespan of a show can extend for many years. The risks up-front are not nearly as large as they are for the scripted side of our business. It’s a business we like very much and intend to be a meaningful player in for many years to come.

How is your off-network business?

The off-network syndication marketplace has become a vibrant one with multiple well-financed buyers on the cable side for one-hour dramas. We remain in a place we’ve been for quite a while, while the Tribune and Fox stations are the primary buyers for our half-hour shows. From a content supplier standpoint, a positive evolution is that the basic cable buyers are now competitively bidding for off-network comedy alongside the local TV station buyers, and this has caused the value of off-network half-hours to escalate meaningfully in the last five or 10 years.

How are your local TV partners doing keeping up with the advances and driving the conversation about streaming and digital viewing of content?

It varies from station group to station group, and it varies from market to market. Our impression is that the local stations have not been as aggressive in bringing content in its streaming fashion to consumers in their local market.

Is that something that should be a big topic of conversation at NAB?

Certainly a big topic of conversation is the health of the local TV business. What are the opportunities for our local television station partners to enhance their business? How can local stations address the concern about more on-demand viewing and less viewing in real time?

There is no magic bullet, no clear solution that’s a one-size-fits-all for each of our television partners. But it’s safe to assume that at each of these companies, a meaningful amount of time is being spent discussing aggressive moves to enhance and grow their local television station businesses.

Let’s talk about the Warner Bros. show that’s had a huge spotlight on it,Two and a Half Men. You’re in the negotiations along with CBS with the cast and creative team for two more seasons. A lot of people seem to think it will be a long negotiation. Do you think so? When do you expect the future to be determined?

That depends how you define “long.” CBS’ upfront is May 16. Something tells me this will be resolved between now and May 13. Please note that I’m laughing when I say that.

That show is one of many great collaborations between Warner Bros.— and other parts of Time Warner—and CBS. The executives at the two companies have a long history together. With all of that, I have to wonder if the next big media M&A move might involve Time Warner and CBS. What are the chances?

It is my understanding that CBS is not for sale, and those kinds of decisions are made above my pay grade.

Still, wouldn’t you like to see Time Warner own CBS, or maybe ABC? Do you not get jealous when you see Matt Lauer doing a segment onThe Lorax?

I’m not sure jealous is the right word. I do see, as an observer, value in a vertically aligned company, where you have a broadcast network, cable network, motion picture studio and television studio; there are benefits to companies that have those vertically aligned assets.

On the other hand, I think there is a tremendous amount of value to our company being the leading independent supplier of television content. We produce for all five of the broadcast networks. We have at least a couple of shows on each— we’re the only studio that can say that. A meaningful benefit that Peter Roth is able to discuss with potential writers/producers is the fact that when you come to Warner Bros. Television, Peter and his team will work with you to sell your project to the best and most appropriate network for that project. As a writer/producer, if you’re sitting inside a vertically aligned company, it’s far more likely that you’re going to be strongly encouraged to produce for that vertically aligned broadcast network.

You have taken on yet another job this year. Congrats on your election to the chairmanship of ATAS. What made you decide to run?

I’ve been a member of the Academy for a very, very long time. I respect the work they do….I felt my volunteering could have an impact. I’m hopeful the team of professionals that I brought on board on the executive committee and the outstanding governors and professional staff who are already there will be able to move the organization forward in positive ways. There’s a need to evolve the Academy in a way that reflects the changing television landscape. We’re all optimistic that we’re going to be able to accomplish that.

What items are on your wish list for moving the Academy forward?

There are a handful of them. One is a greater awareness and integration of the world of new media. All the things we discussed about original content for Hulu, Netflix and Amazon and the expanding distribution windows for this great television content that we’re producing, and how does that play into the employment opportunities for our peer group members? How does that play into educational and professional development opportunities for our members? That’s the first step.

The second step is, can we play a vital role in enhancing diversity, not only on the board of governors, but how can we work toward expanding diversity opportunities among our peer groups and among industry professionals who work on all these terrific shows? And how do we expand the opportunities for philanthropy?

You were named to the office of the president in 2010 with two other top Warner Bros. business leaders—Jeff Robinov and Kevin Tsujihara —in anticipation of Barry Meyer’s retirement in 2013. The going theory is that Time Warner chairman/CEO Jeff Bewkes will unveil his succession plan for Barry Meyer’s job by the end of this year, likely elevating one of you to the chairman role. Is that the timetable as you understand it?

There is no clear timetable. I’ve encouraged everyone I work with to not focus on succession, but to do their current jobs as successfully as they can and deliver another great year of performance as we did in 2011.

How important is television to Time Warner?

When you look at Time Warner, television is a great majority of the overall business. Jeff Bewkes has talked about television representing around 85% of the profitability of Time Warner. Certainly all of HBO, Turner and half of the profits from Warner Bros. come from our TV businesses. The issues that are being discussed at NAB that impact local TV stations and that revolve around digital meaningfully impact the conversations that we have at Time Warner. While Warner Bros.’ TV production and distribution business is a very healthy business and represents, on average over the last decade, half the profits of Warner Bros., television has a much bigger place in the overall landscape at Time Warner, when you think about the business models for HBO, Turner and both of those not only on the domestic side of the equation, but also from an international standpoint as well. That’s the scale of what we do.

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