Jack Bewkes is a conventionalist, but a levelheaded Time Warner CEO, who grew up in a successful family and studied in the best schools. Bewkes is on a warpath with cheap online broadcasters that distribute content at a very low cost. He is defending Time Warner’s traditional business approach and achievements while at the same time propagating its new idea of selling content through TV Every where, a concept that allow viewers to pay a $ 79 monthly charge and watch TV and movies on web based devices. This business model has two initial challenges; gathering the technologies relevant for launching, and the new web based broadcast companies such as iTunes, Netflix, Hulu, and Boxee, among others. These new online broadcasters rent content to viewers at 99 cents per rental, 70 cents of which belongs to content makers, an idea that Bewkes believes to be unsustainable. He supports technologies like Google and Cisco, which will enhance the accessibility to internet TV. However, he will not let them broadcast his content free, especially it they broadcast alongside ads.
Boxee CEO Avner Ronen, however believes that Time Warner must accept new technologies, as it would reap most benefits. Bewkes has been faced a few management challenges such as the under performance of Time Warner stock, poor investments such as the acquisition of Social site Bebo and divorcing AOL and Time Warner. During his tenure at Time Warner, he streamlined its operations to focus on Content production. He also increased the company’s returns, which meant better dividends for shareholders. Time Warner content is everywhere but Bewkes will only sell it at the right price.
Implications for Professionals Involved in Strategic Management
Strategic management is “the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages” (Gregory, Lumpkin, & Taylor, 2005). It is the responsibility of managers to develop a visionary plan, which will ensure their company’s survival in an increasingly competitive world ( Ireland & Hitt, 1999).
Brady, (2011) explains that Time Warner’s CEO, Jeff Bewkes, beliefs on strategic management; it is not just taking action, but doing so only when the action makes sense. In this light therefore, he has had to make several strategic decisions at the right time, to ensure Time Warner’s market survival. He had to streamline time Warner business portfolio and reduce operational cost, a process Zairi & Sinclair (1995) terms as “redesigning business processes to produce improved performance” (Zairi & Sinclair, 1995). The result is that Time Warner profits grew by 3%. He also had to protect his market share by fighting off new online broadcasters who rented his content at low cost. He proposed TV Everywhere, a technology that allows viewers to pay a monthly subscription fee and watch it on any online devise of their choice. He was also ready to let online broadcasters rent his content as long as they paid the right price for it. Professionals involved in strategic management cannot afford to make poor investment choices.
This is because the losses incurred may be too big to bear. A classic example is AOL Time Warner marriage, which did not last long. Strategic management also means that Time Warner has to embrace new technologies to distribute its content at the price.
Despite the increasing competition, Jeff’ steered Time Warner to commendable profitability. Returns to share holders rose by 13 %, while Time Warner annual returns rose by 1.9 %. It is still debatable whether time Warner will weather the storm but the signs are good.
Brady ,D. (2011, January 20). Time warner and the war against free.
Bloomberg business week, http://www.businessweek.com/magazine/content/11 _05/b4213080929775.html Gregory, G., Lumpkin, T., & Taylor, M. (2005). Strategic Management.
2 Ed. New York: McGraw-Hill Irwin Ireland D., & Hitt, M. (1999) Achieving and maintaining strategic competitiveness in the 21st Century: The Role of Strategic Leadership. The Academy of Management Executive, 13(1).
Retrieved from http://www.jstor.org/stable/ 4165515 Zairi, M. & Sinclair D, (1995). Business process re-engineering and process management: A survey of current practice and future trends in integrated management, Business Process Management Journal, DOI:10.1108/14637159510798248