Bust That Mantra!

“In another era at Time Warner, before a star-crossed Internet merger, the hard-held belief of Gerald M. Levin, then the chief executive, was that ‘content is and will remain king, but distribution is the power behind the throne.’

“These days the king seems to be losing his throne.

“On Wednesday, Jeffrey L. Bewkes, who became chief executive in January… said that Time Warner would completely spin off its cable company, essentially shedding the pipes that have underpinned much of the company's fortune.

“Although the announcement was largely anticipated by Wall Street… it still underscored a profound philosophical shift.

“For years, it was a widely held belief within Time Warner and the media business that there were real financial advantages to owning both the content -- television shows and films -- and the means of distributing it to people's homes.

“But Wednesday's cable announcement, which came as Time Warner reported first-quarter earnings, spotlighted the company's future as a pure content provider. From now on the media company will revolve around two core content businesses that have been out of the limelight in recent years: the Warner Brothers movie studio and Turner Networks, which includes the television channels TNT, TBS, HBO and CNN.

“Although those divisions have produced steady revenue and cash flow, investors and the media have focused instead on the debate over cable and the drama unfolding (still) at AOL.

“Without the cable business, the bulk of Time Warner's revenue will come from the movie studio and the cable networks…

“Time Warner is not the only big media company that has disavowed the industry mantra of marrying distribution and content. Rupert Murdoch, the controlling shareholder of News Corporation, recently agreed to give up control of the satellite company DirecTV in an asset swap with Liberty Media.

“Part of the rationale for the mantra in the first place was that owning both sides of the equation gave companies instant distribution when introducing new networks, as well as leverage with other cable companies.

“‘There is huge growth in further original programming,’ Mr. Bewkes said in an interview. ‘There's more money in putting resources into HBO, TNT and TBS to create hits than into a start-up channel.’”

(“Time Warner Refocusing With Move to Spin Off Cable.” Tim Arango. The New York Times: May 1, 2008. pg. 1)

OKAY, so our mantra was not so transcendental after all.

Now focus becomes our higher state of consciousness.

At least we're reassured that others are headed this way... ?

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