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Time Warner Inc.

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by

Alina Zafar

on 9 November 2013

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Transcript of Time Warner Inc.

June 6th,1998--
Sex and the City premieres
March 31st, 1999--
The Matrix trilogy begins
January 10th, 1999--
The Sopranos Premieres
1998-1999
2003-2004
October 15th, 2000--
Curb Your Enthusiasm premieres
November 16th, 2001--
Harry Potter series begins
November 5th, 2003--
The Matrix trilogy ends
February 22nd, 2004--
Sex and the City ends
July 18th, 2004--
Entourage premieres
2000-2001
June 10th, 2007--
The Sopranos Ends
July 18th, 2007--
Dark Knight series begins
September 7th, 2008--
True Blood Premieres
2007-2008
February 2010--
HBO GO available to Verizon customers
July 16th, 2010--
Inception is released
September 19th, 2010--
Boardwalk Empire premieres
April 17th, 2011--
Game of Thrones premieres
July 15th, 2011--
Harry Potter series ends
September 11th, 2011--
Entourage ends
2010-2011
2012

Presented By:

Chloé Saint Etienne,
Brenna Kilpatrick, Trevor Neuhoff, Kailey Prior, Christine Soler, Kelsey Vega, Marleny Vega, Alina Zafar

Time Warner
Company Profile

Executive Summary

Point of View

Key Events

Financial Profile

Porter's Five Forces

SWOT Analysis
Agenda
- Time Warner consists of 4 main divisions

- Innovation and "Content Everywhere"

- Warner Bros. Entertainment

- HBOgo in the changing digital landscape

- Capitalization without Cannibalization
Executive Summary
Key Events
SWOT Analysis
Where We Stand...
Financial Profile
Porter's Five Forces
So what does this all mean?
Time Warner P&L
(US Dollars, in millions, except per share and employees data )
Buying Power
Supplier Power
Substitutions
Competitive Rivalry
Threat of New Entry
Connection with Warner Bros. gives them access to content, and they have ongoing deals with 20th Century Fox, Summit & Universal Studios

Only have deals with the three studios, could do to expand on movie selection
- Starz, Showtime Netflix
• Netflix has just surpassed HBO in number of subscribers
• "Hemlock Grove" exceeded "House of Cards" in the first few days of viewing, Arrested Development in May
• Showtime's original programming is gaining popularity: Dexter, Homeland, Shameless, House of Lies, coming out with new shows Ray Donovan and Masters of Sex
• Consumers don't want to be limited by a cable subscription,
• Game of Thrones was the most pirated show of 2012
Time Warner has the most revenue in video and with approximately 12 million residential subscribers, have an opportunity to expand their HBO asset and leverage the 40 million subscribers.
Strengths
Weaknesses
Opportunities
Threats
- Sony, Paramount, Fox, Disney, Universal
-2012 Subscriber Shares (Domestic)
HBO.....28.7 M
Showtime.....18.2 M
Starz.....17.3 M
Netflix.....27.1 M
Strong brand equity (huge viewership base)

Leverage consumer's cable subscriptions

Recurring payments = reliable revenue stream

Strong handle on digital (mobile HBO Go app- top ranked in 1st month)
-2012 Studio Market Shares
1. Sony / Columbia....16.6%
2. Warner Bros.....15.4%
3. Buena Vista.....14.3%
4. Universal.....12.2%
5. Lionsgate.....11.5%
6. 20th Century Fox....9.5%
7. Paramount.......8.4%
April 15th, 2012
--Girls premieres
September 2012
--HBO reaches 30 million subscribers in the U.S.
December 12th, 2012
--The Hobbit is released

GAME OF THRONES averages 4.5 to 5.5 Million viewers per episode.
BOARDWALK EMPIRE and TRUE BLOOD, 5 and 6 Million in prime
-Showtime
SHAMELESS, DEXTER, and HOMELAND 1.6 - 2.9 Million
-Starz
CAMELOT topped out at 1.6 Million
- Netflix
Not Public for shows like HOUSE OF CARDS.

BATMAN and HARRY POTTER franchises contribute majority of revenue over the past 5 to 10 years.
summer 2013 large releases include HANGOVER III and the newcomer MAN OF STEEL.
-Disney / Marvel
AVENGERS, IRON MAN SERIES, THOR SERIES, CAPTAIN AMERICA
-In the future,
Warner Brothers only has the concept of a JUSTICE LEAGUE film, in direct competition to Marvel's THE AVENGERS.
Limited international presence (currently expanding as of 2013)

Weakened/recovering economy
Competitor offerings in other multi-platforms (i.e Netflix, Star Movies)

Unprecedented piracy rates

Unstable/unpredictable economy

Continuously evolving technological environment


New outlets for licensing deals in the hospitality and gaming industries

Universal Studios Orlando: revenue increase of 8.2% in 2011 (HP)

Zynga Facebook GOT game generates 500 million installations
-DVD, iTunes and Pirate Websites
-Subscription rates and cable company fees
-HBO will not introduce an internet only option.
-Translates to LOW BUYER POWER
- Nielsen, "95% of Americans watch TV the old fashioned way."
-HBO REVENUES SUPPORT THIS CLAIM
• Epix is emerging, has ongoing movie distribution deals with Paramount, Lionsgate & MGM, but no original programming
HBO
WARNER BROS.
Time Warner should capitalize on the popularity of their HBO content, distributing it within more platforms as a part of their Content Everywhere initiative. Using internationally recognized media assets such as Warner Brothers Studios and HBO, Time Warner could leverage their presence WITHOUT cannibalizing HBO sales by expanding in adjacent industries, such as adding feature films in the Warner Bros. division, or creating an interactive "Game of Thrones" experience in theme parks across the country and/or world.
Company Profile
DESCRIPTION:
Revenues:
$3.4 Billion
7 %
decrease
from 2011
Net Income:
$463 million
20%
decrease
from 2011
DESCRIPTION:
Revenues:
$14.2 billion
4%
increase
from 2011
3%
increase
- Advertising
Net Income:
DESCRIPTION:

World's 2nd largest M&E conglomerate (Behind Disney), biggest media conglomerate in terms of revenue: $28.7B
Business Segments
: Networks (domestic and int'l), Publishing, Film & TV Entertainment
Key Events
: 1972 HBO launch
1989 Time Inc. and Warner Co. merge
1996 Turner Broadcasting System acquired
1999 Venture with AT&T
2000 AOL merger, largest in history($181B)
Publishing Company
- Innovative with current
technological advancements
- Will separate from Time Warner
by the end of 2013
$4.9 billion
10%
increase
from 2011
Home to diverse array of TV Networks:
- World News
- Entertainment
- Animation, Kids/Young Adults
- Sports
Revenues:
$14.2 billion
4%
increase
from 2011
6%
increase
- Subscriptions
Net Income:
$4.9 billion
10%
increase
from 2011
DESCRIPTION:
Revenues:
$12 billion
5%
decline
from 2011
Net Income:
$1.2 billion
3%
decline
from 2011
Lead Entertainment: Film & TV Company
- Feature Film
- TV Distribution to Home Video
- Digital Distribution
- Comic Books, Animation
- Licensing/International
Cannibalization
Risks of going SVOD:
1. Lose contracts with distributors
2. Threaten the success of TBS and CNN
How have they avoided this?
By not charging for HBO Go, consumers have more incentive to get HBO bundled into their basic cable package.
How to continue avoiding cannibalization?
Move to adjacent industries to capitalize content: gaming, hospitality, etc.
HBO owns the rights to their original content
Financials
Point of View
- #1 domestic premium pay television
service in Primetime
- Home to Game of Thrones, Girls,
True Blood, & Boardwalk Empire
Chairman and CEO:
Jeff Bewkes
Senior Counsel: Ken Novack
Additional Key Stats
— April 18: Microsoft Corp. says revenue from its Xbox 360 business grew by $641 million, or 55 percent, in the January-March quarter.
— April 3: Mobile game developer Rovio Entertainment Ltd. Net income surged more than 55 percent to 55.5 million euros ($71.2 million).

http://boxofficemojo.com/studio/

http://variety.com/2013/digital/news/netflix-surpasses-hbo-in-u-s-subscribers-1200406437/

http://ir.netflix.com/results.cfm

http://insidetv.ew.com/2013/04/01/game-of-thrones-premiere-ratings-3/

http://screenrant.com/camelot-season-2-canceled-starz-yman-121919/

http://www.huffingtonpost.com/2012/12/11/dexter-homeland-ratings-showtime_n_2278332.html

http://www.businesswire.com/news/home/20130206005362/en/Time-Warner-Reports-Fourth-Quarter-Full-Year-2012-Results

http://news.yahoo.com/video-games-industry-faring-205534711.html

http://ir.timewarnercable.com/files/doc_financials/Annual%20Reports/468244_010.pdf

http://cdn.media.ir.thewaltdisneycompany.com/2012/annual/10kwrap-2012.pdf
http://www.slashgear.com/zynga-signs-on-to-publish-game-of-thrones-social-game-30279989/

http://www.guardian.co.uk/media/2013/apr/03/game-of-thrones-piracy-record

http://www.forbes.com/sites/quora/2013/04/16/why-are-hbo-television-series-so-good/

http://www.reuters.com/article/2013/04/23/netflix-results-idUSL2N0D91XX20130423

http://www.reuters.com/article/2013/03/21/hbo-streaming-idUSL1N0CD7WP20130321

http://news.cnet.com/ATT,-Time-Warner-cut-cable-deal/2100-1033_3-220953.html

http://articles.latimes.com/1996-10-11/business/fi-52676_1_time-warner

http://www.nytimes.com/1989/03/05/us/time-inc-and-warner-to-merge-creating-largest-media-company.html

http://techland.time.com/2012/06/11/game-of-cords-why-you-cant-get-hbo-or-espn-without-paying-for-cable/

http://variety.com/2013/digital/news/time-to-free-hbo-go-from-its-tv-shackles-1200329375/

http://www.deadline.com/2013/05/hbo-go-without-cable-not-yet-says-time-warner-chief/
Sources
Ongoing debate with regards to HBO's current subscription model

Jeff Bewkes is not yet willing to unbundle the HBO Go offering for fear of cannibalization

Piracy remains a growing issue in the debate

SOLUTION:
take a different approach to expand the revenue stream by licensing content elsewhere
Full transcript