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Q&A: Time Warner CEO Jeff Bewkes Talks AT&T Strategy, WB Shakeup, CNN Growth and 1st Amendment Threats

Variety logo Variety 1/3/2017 Cynthia Littleton
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Time Warner CEO Jeff Bewkes will walk a tightrope in 2017 as he steers his conglomerate through the political theater of securing federal approval for its planned $85.4 billion merger with AT&T.

While that drama unfolds, Bewkes and his top lieutenants also have to make sure Warner Bros., Turner and HBO keep humming along, come what may.

Shortly before the holidays, Bewkes spoke with Variety about how the cultures of TW and AT&T will mesh, the prospect of net neutrality rules going away, and the recent executive shakeup in Warner Bros.’ film unit. He also addressed his eyebrow-raising remarks in early December about president-elect Donald Trump, Democrats and threats to the First Amendment.

It’s been more than two months since you and AT&T announced the merger agreement. What have you learned since then? What has surprised you in the reaction to the deal, internally and externally?

The internal reaction throughout the company has been very good. People understand the substance of the deal and the need to evolve the industry. At AT&T, their top people — (CEO) Randall Stephenson and (entertainment chief) John Stankey — see the road forward pretty much as we do. … I was surprised how well our teams worked together during the period of negotiating the deal. You’re never sure at the outset if different organizations can come together.

What have been the key areas of focus since the merger agreement was announced on Oct. 22?

This merger is not reviewed yet so we can’t jump the gun – there can be no business integration or joint planning going on at this point. The groups have met each other in order to figure out in the strategic sense where the industry is going. We know it needs innovation — better consumer interfaces, faster innovation in advertising. We agree on that and that’s exciting.

With the transfer of power in Washington coming, it seems likely that the net neutrality rules supported by the Obama administration are going away. Is that good for Time Warner-AT&T?

At this point any change to the regulations is hypothetical. I can say our strategy has always been and will continue to be getting our content in front of as many consumers around the globe as we can. … AT&T has been an advocate of the tenets of no blocking, no discrimination, no paid prioritization. I don’t know what more to say about it. We’ll be fine under any scenario.

You raised some eyebrows at an industry conference in early December by suggesting that a Democratic win in the presidential race would have been a bigger threat to free speech concerns than president-elect Donald Trump. That was read as an effort to court Trump’s approval for the merger.

I was asked if we were worried about the new president’s criticism of CNN’s coverage and whether or not that amounted to a threat to the First Amendment. When my answer got short-handed into partisan politics, it got taken out of context. I said that we weren’t particularly worried because of the First Amendment rights conferred to all of us and to our journalism. I said other candidates had also taken issue with our coverage and made comments about our merger post-announcement.

But what did you mean by a threat from Democrats?

The dictation of their party platform proposed a constitutional amendment to repeal Citizens United (the 2010 Supreme Court decision designating political spending a protected form of free speech) which holds among other things that corporations have a First Amendment right to produce programming of political importance in the weeks leading up to an election. We have the First Amendment to rely on whenever an elected official tries to impinge on our rights to speak. If somebody is talking about restructuring or constraining the First Amendment, which was what was being bandied about by (Democrats) in relation to the adjacent issue of campaign finance (in Citizens United), that’s a threat to the First Amendment. I was trying to say that everybody ought to be alert to how important the First Amendment is because of the nature of news coverage.

Why was AT&T more attractive to you than other potential suitors, such as Fox?

The reason we think this works well is that we’re in complementary businesses but not overlapping businesses. And yet there are similarities between the companies. At Time Warner we go back nearly a century to the first talking films at Warner Bros., satellite delivery of networks being invented at HBO and at Turner, the invention of 24-hour news with CNN and on and on. There’s a lot of innovation there. AT&T dates back to the invention of the telephone and the wiring of the country, and many, many years of innovation on top of that plant to get where they are today.

But the working cultures of the two companies are probably very different, with AT&T rooted in the telephone business out of Dallas and Time Warner coming from New York and Hollywood?

I don’t think so. A lot of our key management people have known each other for years. I’ve known Randall for years. I’ve been through a lot of these combinations — Time and Warner (in 1990), bringing Turner into the company (in 1996) and then AOL (in 2001). I won’t get lost in that one but (AOL) wasn’t so much a clash of cultures, as reported, as it was a problem in the business model of the portals. AOL, Yahoo, MSN — none of those that reached such heights at the time ever solved for the developments in the business around them. The adoption of broadband was a big problem making the experience of viewing content much better.

Have you determined a long-term plan for your role with the combined company, assuming the deal is approved?

I think I’ll be here for quite a while to make this work and bring these innovations to fruition.

Let’s talk about Time Warner operations. Warner Bros.’ momentum has been driven by the feature side this year but you just had a big shakeup among Warner Bros. Pictures executives, with Greg Silverman exiting as WB production chief and New Line’s Toby Emmerich taking over as chief content officer. Why the change?

Greg and (Warner Bros. CEO) Kevin Tsujihara made the move together and at a time of great strength for the theatrical side. It’s been a great year and we’ve set up some very strong future slates and Greg was a huge part of that success. He has been talking for quite a while about doing something more entrepreneurial. He’s very involved and interested in technology and he’s interested in working with our flagship enterprise in China, and we’re very happy he’s staying as part of the family. We think he’ll be successful and he’ll make us successful.

Why was Toby chosen for the role of chief content officer? What does the change mean for marketing/distribution chief Sue Kroll?

Toby is a tremendous executive. He’s very eager to continue driving our momentum across the Warner and New Line slates. He’s got great relationships with talent across the spectrum and experience with virtually every genre of film….Sue is doing a great job. She’s a big part of that success, and this will give her an even bigger platform. She will work closely in partnership with Toby in his new role.

What’s the most overlooked growth story at Time Warner right now?

There has not been as much attention paid to the digital, mobile and global achievements of CNN. It’s really evolving fast. It’s got a very large digital audience. That audience is very interested in news and in CNN’s original programming, and its considerably younger audience.

But is it a business for you at this point?

CNN has made huge gains in earnings. It’s going past $1 billion (in 2017). It’s over $100 million in digital. CNN is making gains in every way. The brand’s on a roll and the business is on a roll.

How is the reinvention of TBS and TNT going? You’ve seen some ratings declines at both networks lately.

The rebrands are off to a great start and we’ll build on the momentum at TBS and TNT as we roll into 2017 with more new original content. We’re seeing a lot of creative vitality at the Turner networks right now. That kind of thing is of real interest to producers all over town. And let’s not forget that Adult Swim is a breakthrough network. Here is the leading network for 18-34s in the country, and nobody seems to know it except for the 18-34s.

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