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In a hangarlike Las Vegas exhibition hall on Jan. 6, Jeffrey L. Bewkes is surrounded by flashing screens, by women in campy space-age outfits, and by aisle after aisle of gadgetry: the great American come-on known as the Consumer Electronics Show. It's been seven years since Bewkes, the chief executive officer of Time Warner (TWX), last attended CES, and he looks a little out of place. A few minutes earlier, Verizon Communications (VZ) CEO Ivan G. Seidenberg brought him onstage as a surprise guest during Seidenberg's keynote, but the tech fanboys in the crowd weren't interested in hearing about Time Warner's vast catalog of movies and TV shows moving onto the Web. They showed more emotion for the demonstration of Google's (GOOG) new "Honeycomb" tablet operating system than they did for Bewkes' video featuring Time Warner stars watching their own TV spots on an array of devices.
Now, moving through a sea of geeks after his presentation, Bewkes resembles a Time Warner character himself—one of those well-dressed, humorless robot agents from The Matrix, surrounded by younger, hipper renegades. He strides through the hall, barely glancing at a wall of 3D video screens, and says why he isn't worried about wowing the techies. "I'm here to explain things to the attendees," he says, "because the attendees tend to not understand the media business." At a trade show that celebrates the wonders of low-cost digital distribution, he's an emissary from the land of paid content. His message is simple and sharp: The devices may be cool, but anything that costs money to produce must be paid for, and any service or channel that doesn't carry its weight is destined to die.
For Bewkes, 58, the solution is a Time Warner initiative called TV Everywhere, which essentially forces customers to keep paying their $75-plus monthly cable bill to access television and movie content on any Web-enabled device they choose. He first floated the idea to Comcast (CMCSA) CEO Brian L. Roberts two years ago, and in late December, Time Warner struck a multiyear deal with the cable operator that will allow subscribers to watch all the content from its basic cable channels—including TNT, TBS, CNN, and Cartoon Network—via Comcast's Xfinity service. Digital access for HBO and Cinemax customers will be available in 70 million homes by the second quarter, he says. Verizon FiOS, AT&T (T), DirecTV (DTV), Dish Network (DISH), and Time Warner Cable (TWC) are also expected to roll out versions of the TV Everywhere concept in coming months. Bewkes wants other media companies to offer the same all-or-nothing Web menu, arguing the only way to win the digital war is to "keep it simple, stupid."
Then again, rival approaches to distribution—from the à la carte menu championed by Apple's (AAPL) iTunes store to the cheap monthly subscription model of Netflix—are pretty simple, too. With the health problems of Apple CEO Steve Jobs compelling him to step down for a third leave of absence, his influence must be measured not just across the computer, phone, and device businesses but across the media distribution business as well. In part it can be measured by the model Bewkes is fighting against: Call it the Apple Trap. Consumers enjoy watching shows for free online or going to the iTunes store and renting them for as little as 99 cents a pop, about 70 cents of which makes it back to the content creator. Since that is far less than what other distributors pay, Bewkes is no fan of it. He won't play the 99 cents rental game for first-run fare, but he is willing to sell episodes, charging a premium for HBO content. "I've talked to Steve Jobs quite a bit," he says. "I tell him if he wants to sell our content, he has to pay a fair price for it."
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