Disruption & The "Right" Owners
In late 2021, WarnerMedia CEO Jason Kilar (who just announced his resignation) sat down for an interview with Peter Kafka of Recode Media. During the discussion, Kilar was asked about the views of former Time Warner CEO Jeff Bewkes, who has said he didn’t believe the company could’ve successfully pursued a global DTC SVOD strategy under his leadership; as a result, Bewkes says that he realized as early as 2014 that the company would ultimately need to be sold (as a reminder, it was acquired by AT&T in June 2018). In response to that comment, Kilar said the following about a key skill set required for a great public company CEO (40th minute):
“One of the most unheralded skill sets that’s needed in today’s world is communicating clearly and simply to the market about the journey that you’re on… [You need] to be very, very clear that this is what we believe is going to be the best path to optimizing future free cash flow. I think that is an incredibly important skill… I think that’s really important.”
There are two interrelated ideas that I want to discuss in today’s article. Luckily, with some help from Tinderbox, James Andrew Miller’s recent book about the history of HBO, we can address both of these points by focusing on the challenges that Bewkes faced in the early days of video streaming.
By the early 2010’s, Bewkes realized he had a major problem on his hands. Netflix had pioneered an innovative video distribution model with DTC SVOD, and Bewkes saw the writing on the wall: if Time Warner was unable to transition to this new business, it would be left in the dust. The problem, as he recounted in Tinderbox, is that he didn’t have an effective solution: