Time Warner Inc (TWX): Content Is King?

Revenues from Internet subscription providers will be a significant contributor for the firm. The CW, which is the joint venture between Warner Bros. and CBS has been licensing a lot of content to Internet based distributors including Netflix. Time Warner generated over $350 million in SVOD revenues in 2012, and more than $100 million in Q1 of this year. Both Warner and Turner signed deals with both Netflix and Amazon.com, Inc. (NASDAQ:AMZN) to provide more serialized content.

And increasingly Netflix, Inc. (NASDAQ:NFLX) is becoming more selective in what it is trying to buy. Netflix walked away from its deal with, as Netflix can leverage its own status as an original content firm in licensing negotiations. However, it is possible that Netflix’s set audience of more than 36 million, might be more willing to drop their premium subscription services from HBO or CBS’s Showtime Networks. While Showtime, HBO and Netflix are often viewed as competitors, the increasing amount of original content produced by each of these firms is making their respective offerings vastly different, which reduces the competitive forces in the space.

Going Forward

Time Warner Inc (NYSE:TWX) is now a leaner and more focused global leader in the media and entertainment business at large, a material shift from its earlier days when it was a conglomerate wearing numerous hats. The company’s massive footprint across TV networks, Film entertainment on TV and theaters along with world-class brands gives the company a massive lead in its core business of video content.

The worldwide growth of overall video consumption along with number of pay TV subscribers and higher ARPUs in pay TV are encouraging signs for video content production, and Time Warner clearly leads the way. In addition, consumers are platform agnostic, in the way they view their video content, and Time Warner is expanding its mobile offerings by providing more content on both HBO Go and Max Go as well.

The article Time Warner: Content Is King? originally appeared on Fool.com and is written by Ishfaque Faruk.

Ishfaque Faruk has no position in any stocks mentioned. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix. Ishfaque is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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