Time Warner CEO says giving away magazine stories online ‘makes no sense’

Time Warner CEO hints at online fees for magazines

SAN FRANCISCO — Time Warner Inc. Chief Executive Jeffrey Bewkes chimed in Friday with the chorus of publishers wondering how much longer newspapers and magazines can afford to keep giving away their stories on the Internet.

“It makes no sense, as you all know, to run a publishing business with no cost for the content,” Bewkes said at an investor conference in New York. His remarks were streamed online.

Like other publications, Time Warner’s magazines — a group that includes Time, Fortune, People and Sports Illustrated — have been hurt by a steep decline in print advertising. Time Warner’s publishing division suffered a 30 percent drop in ad revenue in the first quarter.

With little hope that online ad sales will ever compensate for the erosion on the print side, more publishers are drawing up plans to charge for access to Web sites that have been mostly free for the past decade. Newspaper industry executives met Thursday in Chicago to discuss the prospects.

Bewkes didn’t specify whether any of Time Warner’s magazines will embrace online fees to increase their revenue.

The television side of Time Warner’s business is faring better than print, and Bewkes said one reason is that the New York-based company doesn’t give away its programming on the Web.

Time Warner owns HBO, which collects monthly subscription from TV viewers, and CNN, TBS and TNT — networks that supplement their advertising sales with fees paid by cable, satellite and telecommunications providers that carry their programming.

“If you ask yourself should we take all of those and put them on broadband and blow up the carriage fees? Probably not,” Bewkes said. “It doesn’t sound good to me.”

Time Warner is exploring ways to make its TV shows available online for people who already pay to see the programs as part of cable or satellite packages, Bewkes said.

The major broadcast TV networks — Fox, ABC, CBS and NBC — are all increasingly streaming their shows on Web sites like Hulu.com. “That’s fine,” Bewkes said, “because it’s broadcast stuff — it’s free anyway.”

Bewkes appeared at Sanford Bernstein’s conference the day after Time Warner announced its plans to spin off its long-struggling AOL division later this year. AOL spent $147 billion to acquire Time Warner in 2001, but the combination quickly disintegrated into a costly mess.

Jettisoning AOL could free up more cash to enable Time Warner to pursue other media acquisitions, Bewkes said, although he stressed the company would tread carefully.

“We don’t need something,” he said. “We are in a position — because we have a strong balance sheet — to be able to take advantage of opportunities if they’re reasonable ones that have a return rather than the lousy ones that have happened.”