Charlie Rose Talks to Jeffrey Bewkes

You recently said that we're in a golden age for television and that the digital revolution is nothing to be afraid of. What did you mean?
I'm just reminding everyone that if you look at the television business ... TV viewing is up, time spent viewing is up, the number of channels and the quality is up—more than films, actually. And the programming investments are up, the profits are up. There's nothing in it that isn't up. And when you say, is it TV vs. the Internet? No, it's TV on the Internet.

Is the idea of free being replaced by a new economic model?
When us oldsters grew up, we lived in the tyranny of free TV. In the '60s, '70s, and '80s, we were all stuck with basically three choices, and all of them were mass, low-common-denominator programming. The programming was made not for you. The programming was made to sell you an advertisement. And so all the programming was the same. Because if you weren't running 30 million people in front of your show on CBS or ABC, you were losing money. And what happened when cable TV or, you know, now Internet TV came along, is it allowed you the freedom to choose what you wanted to watch and pay for. The most naked example is HBO. There is no advertising on HBO. It doesn't matter how big the audience on HBO is. We don't care if you watch on Sunday nights. That's not how we make money from you. We care that you want to subscribe for the month. We're trying to do things that are interesting.

What about Netflix (NFLX)? You've compared it to a small Albanian army that's unlikely to conquer the world. How do you explain that phenomenon?
I'm very committed to and interested in CNN's journalism and our magazines and our movie studio, not just HBO, where I grew up. But I do have a fondness for subscription television.

And Netflix is subscription TV.
So welcome, brother, is kind of what I say to them. They've done some things that, as an HBO person that came up in the shadow of network TV, well, you've got to admire them. They've done a bold thing. They've done a good thing ... because they're offering you a subscription service that's very valid and effective. It's now pretty cheap, you know. It happens to be things that are mostly available other places, which is no criticism because it's an efficiency engine now.

What's the impact of the iPad (AAPL) on Time Warner's (TWX) magazine group?
Tablets generally have made it pretty obvious that magazines have a new lease on life. If you go to any tablet—and I think iPad is a great example—and you read, let's say, People or Time or Sports Illustrated, and if you look at what it offers, compared to the copy of the print magazine, you're going to be excited about how the future looks because you're going to see moving pictures, more like television, not just magazines. [You get] in-depth print that TV can't do, on whatever subject you're reading about ... deeper than we can print in every magazine that we have to put on trucks. And it doesn't cost us anything to do that.

Your magazine subscription gets everything?
Yeah, it's the same for everything. You buy a movie, you should get it anywhere you want it. You pay for a network, you should have that anywhere you want. Same thing with a magazine.

How important is the film business to Time Warner? Why do you need a movie company?
Soulfully, it's very important. From a business point of view, for us it's good.

Harry Potter was very good to you.
Well, Harry was, but so was Batman, Superman, Inception, Gran Torino, Million Dollar Baby.

Time Warner has been buying back its own stock. You've increased your dividend. Can we expect acquisitions?
I'm not saying we wouldn't, but when you're buying another company, you're buying the earnings of some other company. It usually costs more to do that than to buy your own earnings. I'm going to let you in on a little secret: We're going to do better than everybody thinks we're going to do, including any financial analyst that happens to be [reading] this.

When you announce your earnings on Apr. 28?
Well, not just this month, but we're going to do better than everybody has written. So that means we can buy something that we know full well is cheaper than what it sells for. That would be our stock.

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