Time Warner’s Bewkes: ‘Netflix Is Our Friend’

Jeff Bewkes capped off a string of strange diatribes in which he has compared Netflix (NSDQ: NFLX) to “the Albanian army” and “a hamburger” by concluding that the beleaguered movie rental service is “our friend.” The Time Warner (NYSE: TWX) CEO made the remark this afternoon at an industry gathering in New York where he told the audience that his sprawling media company would keep using a familiar formula to make money.

Bewkes sought to play down the threat posed by so-called ‘cord cutters’ to the lucrative cable business by saying that only a small number of low-income people were ceasing to pay for tv. In his view, any drop in cable subscribers is attributable to the economy and is not due to “some kind of distribution change.” Such distribution changes would presumably include services like Netflix which some cord cutters are using as a partial alternative to cable or satellite.

A year ago, the Time Warner CEO famously belittled the would-be upstart as “the Albanian army” and then this week reflected on Netflix’s recent stumbles by telling the Financial Times, “It can do certain things and not other things. It can fly, it’s not a submarine. Don’t turn a hamburger into a cow.”

At today’s gathering, Bewkes did, however, acknowledge that the price of cable packages are beginning to strain consumers and added that the squeeze stems in no small part from the price of sports channels. He suggested that hefty fees like those charged by ESPN (NYSE: DIS) are resembling a tax on subscribers but said that Time Warner has the right amount of sports in its current programming mix. The company appears to be sitting out a recent bidding frenzy for slices of the NFL and is instead looking forward to using the end of the NBA strike to showcase its new basketball offerings.

On the more fundamental question of how Time Warner plans to keep making money from its cable offerings, Bewkes was candid.

“The monetization strategy is simple. It’s the one we all love and the one we’ve used for years,” he said, explaining that carriage fees and a broad subscription base would continue to be the enormous driver of profits that they have been for years.

Time Warner is also enjoying a rebound in other parts of its business empire, including CNN which is profitable and has increased ratings after an abysmal 2010. As for publishing, Bewkes noted that its flagship magazine, Time, was named ‘hottest in its category’ by AdWeek and that magazines have not suffered in the way that newspapers have. But he was also vague about the company’s digital strategy, only noting that tablets allowed publications like Sports Illustrated to show a “more powerful version of their pictures.” Time Warner just appointed digital advertising veteran Lara Lang to lead its magazine division which has been slow out of the gate to exploit opportunities like the iPad.

Audience members asked what Time Warner was going to do to juice its flagging channels, TNT and TBS, and improve sales of its video games. Bewkes acknowledged that numbers in these areas were weak but said he saw promise in the success of the show The Big Bang and the value of games like the Midway franchise.

In coming years, Time Warner can also look forward to cash cows like the Harry Potter and Dark Knight franchises helping it retool the flagging parts of its operations.

Bewkes was speaking at the 39th annual UBS Global Media and Communications Conference.