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Behind Time Warner CEO Jeff Bewkes’s ‘Cord-Cutter’ Pitch

Behind Time Warner CEO Jeff Bewkes s Cord Cutter Pitch WSJ

Behind Time Warner CEO Jeff Bewkes s Cord Cutter Pitch WSJ


Mr. Schoen conducted a survey that found there were 10 to 15 million U.S. households that didn’t subscribe to HBO but were “persuadable,” much like undecided voters. Of those, most said they would sign up for HBO if delivered online.

Only 3% of respondents who had the HBO TV channel said they would drop it for the Web version, say people familiar with the poll. That suggested that HBO could woo cord-cutters without cannibalizing traditional business.

Building HBO’s online offering fell to the network’s chief technology officer, Otto Berkes, famous as one of Microsoft Corp.’s Xbox creators. He developed plans to build a Netflix-like platform that would require hiring 500 to 700 more engineers—up from 85—over several years, say people familiar with the plans.

Current and former HBO executives referred to it as “the golden spaceship” and “lunar landing module,” and HBO executives worried about Mr. Berkes’s ability to deliver on time.

A week before the October announcement, HBO officials met with Major League Baseball Advanced Media, whose technology powers streaming apps like WWE. They decided to rent the technology for HBO Now rather than have Mr. Berkes’s team build it—a move the tech-team leadership believed risked giving up the company’s chance to control its destiny, say people familiar with their thinking. Mr. Berkes and his lieutenants left the company.

“There are those that want to do everything in-house and build an empire,” says Mr. Bewkes, “and then there is me and the rest of us trying to figure out the best way to do this over time.”

But his toughest task has been to win over pay-TV giants. HBO executives have crisscrossed the country over the past few months, armed with the polling data, to get support for the initiative from executives at the likes of Dish and Comcast Corp.

HBO’s evangelizers explained that revenue from selling HBO Now subscriptions to cord-cutters would be shared by HBO and distributors, who have historically gotten about half the roughly $15 retail price of every HBO subscription.

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Revenue sharing with distributors is a clever way to get them to agree to the creation of this new market.

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