Content Is King at Time Warner, But Not Always

Includes: GE, TWX
by: Jeff Bercovici

Tim Arango's New York Times overview of the content-first strategy Jeff Bewkes is pursuing at Time Warner (NYSE:TWX) contains a pair of noteworthy revelations: First, that Time Inc., the world's largest magazine publisher, will probably be reduced to "just a handful of the most profitable titles" before much longer, unless the company sells the unit outright; and second, that Bewkes is seriously considering acquiring NBC Universal should GE (NYSE:GE) decide to sell it after the Olympics.

Neither of these will be taken as a bombshell by anyone who's been following industry headlines; the print business is troubled, and NBC Universal's sale has long been rumored (and denied). What's curious is how both of these potential developments seem to undercut the article's central point, which is that Time Warner, which once placed nearly equal emphasis on distribution and content, is all but abandoning the former in order to double down on the latter.

Time Inc., after all, is virtually a pure-play content business, one whose brands can hypothetically be extended into any medium. (Cf. the publisher's recent deal to produce movies based on articles from Time, Sports Illustrated, Fortune and other titles.) Selling it or trimming it back drastically would thus be a big step away from content.

Meanwhile, the attraction of NBC Universal, according to Arango, lies mainly in being able to sell Warner Bros. television shows to NBC. In-house production now accounts for nearly 80 percent of the programming on the four main broadcast networks, leaving independent producers like Warner at a disadvantage.

In other words, NBC Universal may be a content business, but its value to Time Warner is as a distribution channel. Plus ça change.

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