Turner Looking to Build Its Own Streaming Service

by Cate Lecuyer  |  09.09.2016

Turner eventually wants to build its own subscription streaming service to sell to its channels to directly reach consumers, CEO John Martin told Recode in an interview that touched on many aspects of the changing TV landscape.

“I believe it’s imperative that we put the company on a course, to be in a position, to offer an end-to-end solution, direct to consumer,” Martin said.

While bringing such a service to fruition is still a ways off, Martin said Turner is beginning to build out technology, such as global VOD capabilities, necessary to deliver its own digital programming as pay TV subscriptions continue to decline, and cord-cutting consumers balk at the high cost of cable bundles.

“Over the longer term — and I don’t know whether that’s seven years or 10 years — we will be in a position where we will have the technology to control the consumer experience, end to end,” Martin said. “…But there’s a whole evolution that happens between where we are today and that.”

The move in that direction would put Turner in competition with its current customers—pay-TV distributors such as Comcast and Charter—but it would would also be naive of Turner to think that people in their early 20s will be consuming multichannel television in the same way as previous generations, he said.

With distributors paying Turner about $5.5 billion a year, Martin said the company plans to continue to be great partners with them, but expressed frustration with their ability innovate quickly on the consumer experience front. Turner’s path toward direct competition with the cable industry is something distributors don’t necessarily like it, but they understand it, he said.

“Intellectually, when you have conversations with these companies, they can’t really argue why we shouldn’t be supporting these virtual MVPDS,” Martin said.

Turner’s deals with Sling TV, Sony and Hulu—which plans to launch a virtual MVPD next year—are all indications of where the road is leading.

Turner has also been investing heavily in digital, including Mashable, Refinery 29, online comedy factor Super Deluxe, iStreamPlanet, and the $200 million acquisition of Bleacher Report.

“It’s really about trying to extend our reach and gain scale with these audiences,” Martin said. “And to make targeted bets to work more closely with these companies that have really big audiences that are having problems monetizing.”

From there, Turner is interested in exploring into what those commercial relationships evolve, he said. And the company is not alone.

HBO, which like Turner is owned by Time Warner, launched HBO Now and began selling internet subscriptions via distributors such as Apple and Amazon. Disney has invested $1 billion in MLBAM’s BAM Tech to launch an ESPN streaming service featuring content not available on television, with the potential to eventually offer digital-only access to that programming.

In the short term, Martin is focused on overhauling TBS and TNT, and last year brought in Fox and NBC veteran Kevin Reilly to begin refining the networks’ brands. The addition of solid shows such as Full Frontal with Samantha Bee have helped TBS finish the year as the number-one cable network, and draw in younger audiences, he said.

Viewers are also going to see more distinctive voice dramas on TNT as the network finally embraces original programming.

“We have no chance without it,” Martin said. “We held on to the broadcast substitute model probably three years longer than we should have.”

Overall, Turner is looking for new revenue streams, which can come from initiatives like launching an OTT service, and is trying to grow its “inelastic content”—intellectual property that it owns and controls, ideally on a global scale, and that is not easily replicated.

“For Turner to succeed, we have to be thinking about the consumer first,” Martin told Recode. “We can’t hold back innovation, and we can’t get stuck to an ecosystem.”


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