- Time Warner's networks want full-season rights for their shows
- Shares up after company says 2015 earnings beat its forecast
Time Warner Inc.’s strategy against Netflix is taking shape.
Hoping to keep viewers who are dropping cable subscriptions for online streaming services, Time Warner is negotiating to make full seasons of more shows available to pay-TV customers on demand, according to Time Warner Chief Financial Officer Howard Averill.
Time Warner’s cable networks, which include TNT and TBS, have “made it clear” to Hollywood studios that they want so-called “stacking rights,” or the ability to air full seasons of shows they buy, Averill said. Meanwhile, Time Warner’s Warner Bros. studio recently sold a new show, “Lucifer,” to 21st Century Fox Inc., that allows cable subscribers to view the entire first season on demand -- the first time that Warner Bros. has granted full-season rights to a broadcast network, he said.
“You are starting to see momentum,” Averill said Thursday at a Citigroup Inc. media conference in Las Vegas. “We have to continue to move along that path to make sure we provide the consumer what they’re looking for.”
After Time Warner and Fox executives signaled last fall they were adjusting their Netflix strategies -- Fox said it would sell more content to Hulu -- Averill’s comments offered detail on what Time Warner plans to do. Investors have become concerned that TV producers may be jeopardizing the long-term health of the TV industry for lucrative short-term deals with streaming providers like Netflix and Amazon.com Inc., whose popularity is taking viewers away from regular TV watching.
By offering consumers the option to catch up on shows by binge-watching like they do on streaming services, Time Warner is trying to keep them from dropping traditional pay-TV subscriptions. Currently, cable subscribers can only watch the last five episodes of many shows because studios have sold the exclusive full-season rights to online video services.
For years, media companies have promoted a solution called “TV Everywhere” that allows cable subscribers to watch shows on-demand using any device they want. But it has been slow to catch on, partly because consumers often can’t watch full seasons.
If media companies want to compete with Netflix, they need to “make as much content available to consumers as possible,” said Paul Sweeney, an analyst at Bloomberg Intelligence. However, Hollywood studios -- as well as producers and actors -- have been opposed to selling full-season rights to TV networks because Netflix won’t pay as much if full seasons are available through pay-TV distributors. So media companies are likely paying more to studios to acquire full-season rights, Sweeney said.
“Stacking rights are more important now than they’ve ever been,” Sweeney said.
Netflix didn’t immediately respond to a request for comment.
Time Warner shares increased 2.3 percent to $70.20 Thursday after Averill said the company would end its fiscal year “just above the high end” of its 2015 earnings forecast range of $4.60 to $4.70 a share. It was the second day in a row that the stock gained more than 2 percent amid a rout in global markets. On Wednesday, Time Warner Inc. rose the most in 1 1/2 years after Credit Suisse predicted the media industry will rebound this year from a disappointing 2015.
Time Warner shares fell 24 percent in 2015 as investors became increasingly worried about the impact of cord-cutting on the health of the TV industry.