HBO Go? No Chance, Says Time Warner CEO Bewkes

One of the big M&A stories of the summer was Rupert Murdoch-led 21st Century Fox’s (FOXA) unsolicited ~$80b bid for Time Warner (TWX). The deal would have created a media behemoth, but after facing resistance from Time Warner and shareholders, Fox yielded (for now) and announced a big buyback instead. A couple important items emerged from all of the hoopla surrounding the deal though. The first was that Fox’s CEO Chase Carey has an awesome mustache. Just impeccable and I can’t believe I missed this during the News Corp (NWSA) spinoff. The second item is that HBO is viewed as a tremendous gem and a very desirable asset within Time Warner’s portfolio.

Naturally, that last point led some to ask whether or not it would be better off on its own. Could a spinoff or IPO of the creator of smash original programming such as The Sopranos, Game of Thrones, Girls (and so on…) be in the cards? Nope and CEO Jeff Bewkes is quite adamant about it. Here he is speaking on the subject at last week’s Goldman Sachs Communacopia Conference:

Andrew Borst

Let me do one more on HBO and I’ll move on. But there’s been some speculation in the market about the possibility of partial IPO maybe of HBO or a tracking stock. And wonder if you can sort of talk through what you see as the pros and cons of maybe doing some something like that?


Jeffrey L. Bewkes

We’re not going to do that. We don’t have an interest in doing that. We don’t think it helps you. Our company now is pretty focused. We think we’re busy making it. We’ve got big scale at the Warner Bros. and in film and TV, big scale at Turner in basic cable, big scale at HBO. So it’s not hard or unclear to look at Time Warner, see the value of any of the pieces. So we don’t think it needs any kind of highlighting like that to do what you’re all capable. I’m sure, you have numbers right there that are quite precise along with everyone of these. The negative of it is we spend a long time trying to get the company to an effective — with scale that focus power that we have today. So that means we’re nimble, we cooperate very well across Warner, Turner, HBO, and we don’t have ancillary interest we got to deal with that prevent collaboration. You start having kind of sod value, if you take one of the pieces and make it more rigid, it prevents the flexibility of doing what you need to do with all of it as a group. So we just — it just doesn’t seem — because it would be for more optical or communication reasons, I think the burden is on us to communicate what we’re doing with any part. If it’s HBO, that part of the company. And that’s why I’m here, trying to explain.

So there you go. No spinoff and no John Malone-esque tracking stock wizardry for HBO. The company and Mr. Bewkes just need to do a better job ‘explaining’ the benefits of keeping everything under one roof. Ahhhhh. In the ‘good old days’, a $65b company like Time Warner would have never worried about activists causing trouble, but that just isn’t the case anymore today. Management is going to be under a lot of pressure to perform after rejecting Fox’s bid without (seemingly) considering it and this could become a ‘hot’ issue. Nothing really doing here right now, but it’s worth keeping an eye on it.

Disclosure: Author owns shares of TWX.