Time Warner CEO says consumers benefit from cable TV bundling

Consumers may want to pick and choose what channels they pay for but Time Warner Inc. Chairman and Chief Executive Jeff Bewkes says they don’t know how good they have it under the current pay-television system.

“I don’t think it’s desirable for consumers to break the bundle,” Bewkes said in remarks at the UBS Media and Communications Conference in New York on Tuesday. “You end up paying more for less.”

The bundle, which is industry lingo for how cable networks are packaged and sold to distributors and customers, has become a hot topic of late because of rising pay-TV bills. On Monday, Glenn Britt, the chief executive of Time Warner Cable, which is a separate publicly traded company, warned that he was looking to drop underperforming channels.

“This stuff is just starting to cost too much. If we as a broader industry want to keep this going we need to get the prices of packages lower,” Britt said.

The majority of cable networks are owned by a handful of media giants including Time Warner Inc., News Corp., Viacom and Walt Disney. Typically, these companies package all their channels together. While a pay-TV distributor may end up getting a discount on a highly rated channel through this method it also usually means carrying less popular channels as well.

“They have to figure out who gets the money and who drives the value -- we think that’s us,” Bewkes said.

Time Warner’s cable properties include TNT, CNN, TBS and TruTV. Bewkes reiterated that he expects “double-digit” rate increases in future contracts for those channels from distributors. TNT already gets more than $1 per subscriber per month from cable and satellite operators, according to SNL Kagan, an industry consulting firm.

With regards to the issue of people watching less live television, Bewkes noted the number of consumers watching content on platforms other than television is growing and media companies are getting paid for it.

“The monetization of the viewing is taking place even if the measurement hasn’t caught up,” Bewkes said.

“This is supposed to be an erratic business of hits and misses -- well not for us.”

As for CNN, which last week named former NBCUniversal Chief Executive Jeff Zucker as its new worldwide president, Bewkes said the all-news channel needs to be “much more expansive” in what it covers and not “reduce news coverage to political subjects.”

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Follow Joe Flint on Twitter @JBFlint.