Nearly nine months into his gestational period as chief executive of Time Warner, company loyalist Jeffrey Bewkes is hoping to deliver a media behemoth reborn. The 56-year-old Bewkes—a three-decade veteran who started out at the fledgling HBO (which he eventually steered to critical raves and record profits) and next year will add chairman to his title—has the task of fixing a company that still suffers from its legendarily disastrous merger with AOL.
  
This week he's on a public campaign to accentuate the positive. Bewkes is trying to convince skeptics on Wall Street—who have kept Time Warner's battered stock price flattened at around $14, even worse than the already-anemic valuation that greeted Bewkes when he took the top job—that he's taking the bold steps necessary to turn things around at the world's biggest media conglomerate.
  
On Monday afternoon, as the Dow Jones plunged more than 500 points, Bewkes gave an exclusive interview to Portfolio.com, explaining his moves of the last eight months—splitting off Time Warner Cable into a separate distribution company, acquiring the social network Bebo for a whopping $850 million, shutting down New Line Cinema, and reducing corporate overhead, among other things—and outlining his vision of Time Warner's bright future as the world's leading media and entertainment supplier.

Lloyd Grove: So, you having fun yet?
 
Jeffrey Bewkes: Yeah. Are you going to write descriptive stuff so I have to convey—"Yes!"—extreme exuberance? I want to be respectful of the financial community today.
 
L.G.: [Laughs] Actually, one of my questions was, Lehman Brothers downgraded you [Time Warner stock] in July—is this a warning?
 
J.B.: They downgraded everybody, I think.
 
L.G.: I do want to ask you, given that the important financial institutions seem to be in meltdown, with all kinds of implications on the rest of the economy, how much exposure does Time Warner have in all of this?
 
J.B.: I think it's a good place to start. You know, I don't want to say that the media business isn't connected to what happens in the economy, because everything is connected in the economy. But in relative terms, the media business, and maybe our company particularly in the media business, is less subject to the cyclical downturns than many consumer businesses. And the reason is, if you look at Time Warner, the ongoing core content company, which I think we'll talk about—networks, film production, publishing titles, internet ad-supported services at AOL, and subscription at AOL—basically Time Warner without the cable distribution, and we could talk about that too—the cable business happens to be going into a separate place. But even the cable business is historically, relatively, not affected by economic downturns. So that's true for them too. But in Time Warner, the remaining company, the core company, we have about 40 percent of the business in content and sales of movies, TV shows, we have about 30 percent in subscriptions, and about 25 percent in advertising. And, the first two, the content sales and the subscription levels, are not adversely affected by the downturn—so the first two are not sensitive. Many years of normal economic slowdowns have actually been countercyclical, where going to the movies, keeping your cable subscription, and so forth has seemed like a relatively more efficient and more important purchase for consumers. They've actually benefited.

L.G.: Well, not to make any invidious comparisons to 1929, but wasn't that the case with Hollywood during the Great Depression?
 
J.B.: In the '30s, yes. And so it's true for movie tickets; it's certainly true for cable subscriptions, magazine subscriptions. So essentially the content sales and the subscription part don't see much harm from economic slowdowns. The third part, advertising, does see pressure on it, but not in all of our businesses. And the strong part of our advertising business is the Turner Cable Networks—which have had, and right now still have, very strong ad growth, double-digit ad revenue growth, and they've also got a fair component at Turner of what they do that isn't advertising—subscription fees for cable operators and satellite operators—that's pretty strong and steady at HBO and Turner. So the part of our company—Time Warner as a media company, 25 percent of it being ads—a good chunk of that being Turner's cable ads, which are very strong. We have a fairly small part of our business at essentially Time Inc., a publishing company, where the ads are actually down.

L.G.: Revenue is actually down.
 
J.B.: Yes, and at AOL it's a mixed bag. There are some parts of AOL ads that are growing quite strong. Search is in the midrange, third-party ad growth, display ads—which is in the main portal—are flat basically, flat to slightly down.

L.G.: After several quarters of 40 percent growth, you're now at 2 percent growth at AOL.
 
J.B.: So there's been disappointing growth in ads at AOL this year, and we're saying that the ad growth for the second half at AOL, which we thought would improve—we don't have this ability now to say that it will. Now the good news underneath that is the traffic, the users of AOL, the number of people, the amount of time they spend, the kind of ratings, if you look at it in television terms, are good signs of health. Because the reprogramming of all the program categories at AOL had very strong growth in usage, growth in page views, so the traffic is up.

L.G.: I suppose this would be as good a time as any to ask you about Bebo. You suggested in the recent past that you may have overpaid for it: $850 million. How are you going to monetize that?

J.B.: Well, we're going to monetize, as we said, by linking Bebo to our community assets—which is AIM and ICQ. Bebo is undergoing some upcoming transformations itself—where we think it can become a leading, maybe the leading, social media network. When you look at Facebook and MySpace—what are they, social networks? Bebo is a thing where you can do social networking, but we think Bebo has more powerful tools for you to interact not just in social-networking terms but also with social media, so you can use copyrighted media and look at copyrighted media easily or user-generated media with your group of friends and do it all inside a very easy-to-use Bebo application. So as the ability of the performance ad networks like our Ad.com, Platform A, become better at monetizing social networks—which has been the big subject at Facebook, at MySpace, and at Bebo, how do you monetize it? Then we think that, a) social networking inventory can be more monetizable than is currently believed, and proved, but b), because if you go and look at the way Bebo users use it, they look at more media, visual media, movies, films, TV, user-generated content. They do more of it than is done on Facebook or MySpace, which means that if you're lining up ad support from advertisers, it's closer to an environment that they usually place ads on. If you're talking to users and you're trying to figure out, is an advertisement a commercial message on Bebo as welcome, as impactful, or more so than what it would be in the middle of a MySpace or Facebook interaction? We think more so, because you're more used to, as a user, seeing relevant commercial messages if they're put in the right context to what you're doing if you're looking with a friend at media. Whereas you would not be used to, or welcome, a message that's coming in when you're in the middle of just a stray conversation with someone.

L.G.: What's your timetable to see whether or not this is true?
 
J.B.: A year or two.

L.G.: And if you had to do it all over again—not to harp on this, but just to get your answer—would you pay $850 million for Bebo?

J.B.: Maybe. I'll tell you why I can't give you an answer. Because when you're doing an acquisition in an auction, the core purpose of the auction is to try to get as much buyer and competing interest. When you look back at it, you then have to reveal—which I can't to you—what I know about the other bidders. And you learn more of it after than before. The reason we said—when we kept being pressed by people, when they said "did you overpay or not?" we said we don't know—is if our plans work out, we did not overpay. But then somebody says it's compared to what you could've paid. If our plans work out less well than we thought, we would have overpaid by a few hundred million dollars. I'm not sitting here now—I don't know if that's the case—under a high case, we've actually made a lot of money on it. So it's really too early to say. It's kind of like saying, did Google overpay for YouTube? What was that number—$1.6 billion? They haven't monetized that yet. Actually, MySpace hasn't either. Now News Corp. paid $580 million.

L.G.: You've been in this job eight and a half months.
 
J.B.: Let's make it eight. I took a week off.
 
L.G.: You have done pretty much everything that people have been clamoring for you to do. You've spun off cable, you're splitting the dial-up access from the portal at AOL—
 
J.B.: We've consolidated the film company—they were not clamoring for that.
 
L.G.: You're putting all your corporate jets on eBay? No, you're not. But you've decreased overhead by what, $50 million so far?
 
J.B.: No, more.
 
L.G.: Why isn't Wall Street saying, "this is change we can believe in"?
 
J.B.: Well, they are, because if you look at the stock value of Time Warner in the last eight months—which, granted, here it is today, everything is down—but if you look any time in the last week, let's say, we've been somewhere between flat to down. At one point we were up 5 percent, but we've been kind of flat, give or take 5 percent. Where are we now? Minus 5 to 10? Eleven to 12 percent—something like that.

L.G.: But I notice you've said you've outperformed every media company but Disney.
 
J.B.: Right. Here are some companies down 30 to 40 percent. And Disney's up 3 percent.

L.G.: They're not being dragged down by "the worst business deal in history." [The 2000 Time Warner merger with America Online, which, by some estimates, vaporized $125 billion in shareholders' equity.]
 
J.B.: There's another point on that, but the media business has, on average, been devalued down quite a bit more than we have during this period. And the overall S&P is down probably 20 percent now. So, as with everything that's relative in that overall market of either the S&P overall industrials or the media business, we and Disney have kind of outperformed the others. But there's a further part of Time Warner that, you know, I'll just say it so you know, Time Warner is composed of two large pieces. There's the content company we've identified going forward, and there's the cable company. Now if you look at the cable company, which is part of the secular cable valuations that affect Comcast and DirecTV and all that. We think the prospects for cable are good. We didn't say we were going to separate it because it was inherently an issue. We just said it would be valued and operated better separately than this. But if you take cable being down, which it is, more than Time Warner parent—which is about half the company—it means the other half is up! So, going back to your point, if the things we've done in defining what Time Warner will be going forward, in getting cable ready for its own financial structure, and in doing the things at Time Warner we talked about, whether it's film consolidation, overhead reduction, and operating performance that's good at networks—it has caused the Time Warner content company to perform basically where Disney is. So essentially, there is some valuation recognition or realization of what's happened so far. And, of course, the question for Time Warner shareholders going forward is, well, how do you take this and move it up and create real returns over time?

L.G.: You're expected to get $9.25 billion from the cable spin-off when that's complete at the end of the year?
 
J.B.: Yes.

 
L.G.: What are you going to do with that money?
 
J.B.: Well, what we're committed to doing, not just with that money but the money we get from ongoing cash flow—because we have a very strong, large cash flow every year that we intend to have go up—is, we're going to either use it essentially—

L.G.: What is it—like $11 billion?
 
J.B.: Well, no, the cash flow for Time Warner today, with the cable in it, this is free cash flow net of debt payment and everything else—we've said, $4 to $5 billion. But let's put it this way, the cash flow for Time Warner, after cable, is disproportionately high compared to what it is now because cable uses a lot of capital. So it spins off and we'll be able to keep a large part of our cash-generated capability at Time Warner. So added to the money that comes out of cable—
 
L.G.: So the $9 billion plus—
 
J.B.: Several billion beyond that. So what do you do with it? This is what we always do. This will be an ongoing basis: Invest the money on any ongoing business needs that we have to make sure our existing businesses at Warner, Turner, HBO, etcetera—any returns they'd have that are superior returns, we can put in the money. We've never been short of capital for those purposes, so that essentially continues with the discipline that it's had. Second thing is, you also look for any acquisitions that would improve the strategic position of any of those companies or the total company. But in a way—now here's the problem—in the media business, most of the acquisitions that most companies have made have not produced a good return. And a lot of the investments or acquisitions Time Warner has made have not produced a good return. And so we would only make acquisitions that really we had a high degree of confidence that we knew how to operate them, essentially things that don't have that much risk because we'd know how to operate them, how to consolidate them with our existing managements and so forth. Which probably means, given the magnitude of the cash resources that we have, that a large amount of the cash flow isn't needed for either reinvestment in ongoing business or in acquisitions. Because it's hard to find acquisitions that are priced reasonably enough that we end up thinking they're worth doing. The Weather Channel—which was a good asset, and something we knew exactly what to do with—we just didn't think the price of what it would've cost to buy worked.
 
L.G.: What were they asking?
 
J.B.: They were asking, what was it, three and a half [$3.5 billion]? And we just thought it didn't give us a high enough return. The likely question, we're looking at all those things, and probably in shrinking the equity bases. Meaning, you know, buying the stock because if the stock is trading at a modest multiple, which is what they are trading at today, then you would in that case make more money buying your own stock—that you know exactly what it's worth—than you would buying some other things at a higher multiple.

L.G.: Because you've said over and over that the stock is woefully undervalued.
 
J.B.: Yes. Whenever you take cash and buy stock in some company, you're buying the earnings of that company. So if you're buying a dollar of earnings at Time Warner for seven or eight, then you'd rather do that than buy the earnings of a company you don't know for 12.

L.G.: How much stock would you buy back?
 
J.B.: I won't say. The point is, with all of those choices—whether you invest in the ongoing businesses, you look at acquisitions or you buy stock in Time Warner—what we will do will be aimed at simply maximizing the return on investment for our shareholders. That literally is the motivating way to decide.

L.G.: Because obviously that's the standard in the end by which your job here will be judged. What about NBC Universal?
 
J.B.: Well, that's just a speculation.

L.G.: It is. I just wondered if you're intrigued by that.
 
J.B.: You know, intrigued, do we have to use that word?
 
L.G.: No. Any word you want!
 
J.B.: Look, everyone speculates about what will happen to all of these media companies, and there's a fair amount of speculation as to whether G.E. will decide that the NBC Universal company benefits from being inside G.E. or not. To the extent it decides it doesn't, then they have to think of what to do with it. People leap to the idea, probably wrongly, as they say to sell it. That's not necessarily the case.

L.G.: Well, they keep saying, they won't.
 
J.B.: I know. If they did, they have a taxable sale or something, so I don't want to prejudge them, but they have to decide what's in their interest. But if they decided not to sell it, they may decide to spin it off, who knows? Anything that comes up, this is true of all the usual suspects, whether it's Scripps or NBC or Discovery, names come up in every sector we're in, and they ask, are we interested in it? Well, I would go back to what we just said.

L.G.: "They" being the kibitzers?
 
J.B.: Reporters, analysts, investors, everybody. We already said that we have kind of an obligation to look at anything that is out there that, if combined with our company, would produce a clear return for our shareholders. The problem with those speculations is that no one ever knows the price at which any of these things would be available. And we're kind of a big media company—at the lead if not the lead in most of the markets, from movie production, TV production, networks, magazine publishing. So if something comes up in one of those, we are an obvious candidate to consolidate and operate those businesses. We'd have to look at all of them, we will look at all things that happen. That does not mean we'll do them. It just means we'll have to look at them and see if they're available and they're things we think we could operate—and if we could, with a high degree of confidence, operate them at a return that exceeds the price of whichever method it would take to acquire them. We don't set out with a need or a predisposition to acquire them. We have kind of a responsibility to look at.

L.G.: By the way, earlier you mentioned acquisitions which have so far not worked out well for you, as with other acquisitions at other companies. I wonder if you'd care to tell me which acquisitions you have in mind.
 
J.B.: I wouldn't. I mean, some of them are obvious, and I don't want to start throwing feints. Never mind.

L.G.: You don't want people jumping out of windows just yet?
 
J.B.: No. I'd rather you can point them out.

L.G.: If you don't want to say it, that's fair, but I was just curious. Now, when John Malone says publicly he'd like to think about acquiring the dial-up business, how do you react to that? When he says maybe we'll exchange our [Liberty Media's] shares in Time Warner for that, either way, $1.6 billion dollars' worth?
 
J.B.: I don't think it's a good idea to give specific answers to people's overtures through press interviews because I talk to John directly.
 
L.G.: Well, John obviously thinks it's a great idea.
 
J.B.: Well, let's just say that what we want to say to John about it I say to him directly. But I think as a general matter, the same thing is true of divestitures as of acquisitions, which is, if there's something that we can divest, and by doing it, we can increase our return, we can invest it for more than what it's worth to us, then we would do that. It's pretty simple. This is like saying we like to do things that make money, which if you really strip it down, that's all we're saying. We like to do things that make money. Whether it's acquiring or not, or divesting. Of course, the trick is knowing whether they do make money.
 
L.G.: I don't think you've said that you're committed to selling the dial-up business.
 
J.B.: We actually haven't said we're committed to buying or selling everything. We're committed to doing either of those things that would make us money. It's basically what we're saying.
 
L.G.: When do you think this will all sort itself out?
 
J.B.: AOL is a bigger question. There's two major pieces of it, advertising-audience business and then the access-subscription business—if you stay on the access-subscription business, that's been a very profitable business, it still is. It's making a lot of money, but it's a declining amount of money because the subscribers are moving to broadband as everybody knows, and that's why we separated it from the main area, because the subscription dial-up business is reducing in volume and revenue and earnings, even though highly profitable, and the AOL advertising and audience business is growing in terms of users and revenue. We've had a flat few quarters, but we think because the traffic is growing, and we should get there in the right time. There's an addition in the new AOL portal growth. There's the new, new AOL, which is the advertising platform, which is related, and which benefits a lot from the AOL traffic growth, but within itself, has the highest rate of any ad platform on the internet.

L.G.: You've suggested that perhaps the scale might not be right.
 
J.B.: Yes, because if you look at the decisions and aims taken at Google, at Yahoo, at Microsoft, at AOL, at IAC, you see all of these competitors looking very hard to get scale. One reason is, if you go to the search part of the internet-advertising business, which everyone knows, Google has built a very strong dominant position in, that has resulted in not only revenue growth but a fairly attractive kind of long-term strategic outlook for Google. So that's in search—because they have such a high scale, and that works because they get an efficient auction in place for advertisers to come. They get a lot of consumer data that they can use to put efficiency into their search results and their ad placements, so it all feeds on itself. If you then go to the other parts of the internet that are not as consolidated as that, the internet advertising that is not as consolidated, which would be, let's say, display advertising, AOL is a leader in display advertising. But the other participants that are of similar scale are Microsoft and Yahoo, which means that they've got the potential for the same kind of scale in display that Google has in search. But Google's in one operating system and those are in three. So that is what's raised the question of whether the display ad business might be more competitive if operated at a larger scale, which is where that question comes from.

L.G.: Are you committed to keeping the magazines?
 
J.B.: We're committed to making the magazines profitable in the long-term for shareholders, for the owners.
 
L.G.: And everybody's going through the same troubles. No one's figured it out. You haven't figured it out.
 
J.B.: Well, no. There are a couple of things that are clear. There are certain parts of our magazine portfolio that are growing in revenue and earning quite handsomely. And the parts that are the hardest, particularly in a recession, are the straight news and worldwide journalism, news-gathering costs and so forth. The advertising support for those have come out of industries like autos and tech, pharmaceuticals, that are constrained a little bit in their ad purchases. So I don't think we should view the future of the publishing industry, or create what that is, in the middle of an economic contraction. Our readership is fine, our circulation is fine.

L.G.: For the dead-tree part of those businesses?
 
J.B.: We don't call it the "dead tree." If you think of the intellectual property that's inside Time magazine or People or In Style, the effectiveness of the journalism and the magazine publishing content is fine. I mean, readers like it, readership is up, and—
 
L.G.: That's across print and internet?
 

J.B.: Yes, and that's even in the print side, readership is up. You can't look at any magazine now as a print-only thing. They've got their print page and they've got their internet page. And the brands that we've got—this is true of networks as well as magazines or publishing titles—if you have a strong connection with a network viewer or People magazine reader or an In Style magazine—and I say "magazine," but they could be looking at it online, they could be reading it on the page— those things are very successful. Ad revenues are growing, circulation revenues are growing, the usage of the pages, including on the internet—

L.G.: For those two titles?
 
J.B.: All of our titles are growing. You have healthy print growth in some of the titles, that would be like People, Real Simple, and so forth.
 
L.G.: But not Time magazine.
 
J.B.: Not so much. You don't have as much healthy print growth in terms of ad sales, in the news magazines. That's true not just of ours, but across that part of the publishing business.

L.G.: Even some titles are experiencing losses?
 
J.B.: Reductions of income, not losses. No, I mean we're making a lot of money in our publishing. Our problem this year is that with the earnings, we wanted a plan for them to go up, and they aren't. That's the issue. And so, with magazines, as you move into digital, we have some tremendous success in moving to digital. Take People, which is our most profitable magazine. So if you take People and you look at People online, the number of page views of a user who goes to People online, versus any other celebrity site, is like five times what a person would do if they were looking at the competing online celebrity sites. That says several things. One is that the editorial translation of People from print to digital is very successful. What the People readers are getting out of People online in terms of the interacting with the content, interacting with each other, all the tools available for people online, means that it's a very successful example of a digital version of what used to be thought of as a print publishing title. But it says something else, which is, if you then are looking at People on the internet-distribution side, saying, how do you get that powerful People online brand most available to users on every kind of mobile screen, on every kind of home page connection? When people go to an internet site, could be Verizon, could be Yahoo, for any unique visitor that goes to celebrity in your site—if you link them to People, we will create five times the page-view traffic that can be created on whatever else they're doing. Which means five times the potential advertising revenue which we can now figure out how to divide up. That's a powerful incentive for distribution. It's very similar to when CNN and HBO or TNT goes to a cable operator and says, would you like to carry the network?
 
L.G.: I gather all those television entities have had a very strong year, everybody knows that The Dark Knight has so far made a billion dollars or whatever it is, and so those parts of your business seem to be going great guns.
 
J.B.: I should explain something about that, because if you look at those things like they're kind of measured weather events, then it doesn't tell you anything about the future.
 
L.G.: Unless you believe in global warming.
 
J.B.: But if you look at the way they come about—because they don't "come about," our company does them—then it tells you something about the future. And so if you look at what's happened, we've been going along for several years and saying that we thought that in the new world—in the media world—the basic trends in the media world are moving to the advantage of where our company is positioned. And the reason is that there is obviously a lot of new digital ways for individuals to go off in fragmentation. So it used to be 100 channels, now it's a million websites. But, the "long tail" where everyone is going off, the attention is going in two places. One is to highly personalized things, because it can do that; the other is to things that are very popular which everyone can now easily get access to: In other words, the huge global brand like The Dark Knight, like HBO, like CNN, like People online, like TNT, TBS, all of the things that we've built, aiming at strong, global brands, leading in their category.

L.G.: You've also suggested a cross-promotion, cross-pollination among your brands as an advantage.
 
J.B.: Huge advantage.
 
L.G.: Why is that? Is it more advantageous for TNT to be producing something and selling it to another Time Warner entity than selling it to Viacom?
 
J.B.: Well, we do both. The advantage is, we pursued a strategy, let's do our networks because we're a pretty big company. I can give you an echo of this in almost every part of the company, but it's easy to see TNT and HBO and Warner's.

L.G.: But you've also put the magazines in the mix of that. Because otherwise I'd be outraged that you'd be using a journalistic entity to shill for your entertainment products.
 
J.B.: I'm not saying there's some improper—let's go back to journalism a second, then entertainment, CNN. If you take, say, TNT, TBS, Cartoon Network, or HBO, you can do this with any one of them, there has been a question of whether companies should go off and launch 50 new networks which people kept asking us. We did some of it, but we said no, what we want to go for is big brands that we can make very important and worldwide, what we can really put resources behind. HBO is a clear one, because everybody has a clear idea of what HBO is, but they forget that inside HBO is a general entertainment thing that has hour series, half-hour series, movies, miniseries, sports, documentaries, reality, talk shows, comedy, music—I mean, it's a lot of stuff. It fits into a clearly defined brand. We could have gone and made five different pay-TV networks. We did, but we put them all inside a powerful network. It has very strong ability to get itself distributed worldwide. It has very strong abilities to raise its price, and it has very strong abilities to launch new programming: things like True Blood, like Band of Brothers, pick your example.

 

If you go to Turner, TNT, TBS—these are usually one, two, or three in the cable universe. So as audience came off of the old four broadcast networks, they went to cable, but where did they go? They went to really the lead reach networks, and the lead among those are TBS, TNT, often in the mix is USA and a couple of others, but we have two of them, TBS and TNT. And if you look at the ratings growth at TBS, 18 to 34, it's up like 30 percent this year. TNT is leading again, for the umpteenth year in a row, in basic cable. So big audiences coming off the networks to those, and what they're able to do is buy movie packages of successful, expensive movies that they can amortize across two networks, not one. They can buy successful series off of networks like ABC, NBC, CBS, because a lot of them are produced by Warners that we sold to those four networks that we're putting them up to bid. We do take bids and sell them to all comers including other cable venues. Think of Nip/Tuck to FX. But we sell a lot of them to our two big networks, TBS and TNT. And instead of fragmenting our efforts into a lot of little niche channels that frankly wouldn't have broken even and would've eaten up a lot of operating costs, we created more programming genres inside TNT and TBS. So you're looking now at very steady, affiliate carriage revenue growth, very high ad revenue growth that comes out of both, ratings growth and the ability to charge higher prices for the advertising because it's got two things—high reach, huge audiences on cable networks, and high environmental quality. In other words, hit shows in the lineup, Sex and the City, Friends, The Closer, Saving Grace, high-quality environment. So all that leads up to a virtuous cycle of strong revenue growth and economics—the ability to then fund more original programming and to strengthen those brands and then to make all of that available for international sales and internet sales.
 
L.G.: And you're describing something that's happening as we speak, as opposed to something like, "We're going to monetize Bebo with all these great things in the future." Let me ask you—
 
J.B.: Did I say what I'm coming to say? I'm just trying to explain the common thread.
 
L.G.: Because we're in this campaign season, I'm just wondering, who's better for business: McCain, who wants to reduce corporate taxes, or Obama?

J.B.: Oh, I don't know. Who knows? I'm not coming out with political endorsements of anyone.
 
L.G.: Well, anybody can look at your contribution list and see who you support.
 
J.B.: No, they can't. I didn't give anyone any money for precisely this reason—so if somebody's got me listed…
 
L.G.: Somebody's got you listed as initially giving to Chris Dodd. [Bewkes, who donated $1,000 to Senator Barack Obama's 2004 Senate race and also gave $1,000 to John McCain's 2000 presidential campaign, maxed out at $4,300 to Senator Chris Dodd's presidential campaign. But that was in 2007, before he became C.E.O. His policy now is to not to give to any candidates.] 
 
J.B.: That's true, I did give a contribution to Chris Dodd.
 
L.G.: And I'm sure he's a friend of yours. You've known him a long time and he's from Connecticut, blah blah.
 
J.B.: That was in the primaries, and that's a friend. So I'm not taking a political position. We think it's our responsibility not to be doing that.
 
L.G.: I'm just curious, before you took this job I talked to [New Line Cinema co-chairman] Bob Shaye, and he was very—
 
J.B.: He was very generous.
 
L.G.: Very generous and he said, whatever you're going to do was going to be in the best interest of the company, and obviously he didn't see coming what happened. [In April, Bewkes shuttered New Line as an independent studio and folded it into Warner Bros.]
 
J.B.: You know, I was talking to him about it. He's a good man.

L.G.: He's off on his own at another venture now. But just on a personal level, you have longtime relationships and friendships with people within this company, and you have obviously a higher responsibility, you're the guy. How difficult has that been for you to maneuver through all that?

J.B.: That's a good question. I think if you have a personal relationship, we have business relationships but we try to have good, honest relationships of integrity, let's put it that way. So if we're talking here about the responsibilities that all of our top executives have for doing the right thing for the company, for the shareholders, when the needs and interests of that responsibility come in to dislocating any of us, including me, then all of us understand that is a professional, not a personal decision. And so I think that so long as the whole thing is determined that way, arrived at that way, and if it has to be true—it  can't be a cover for some other motive—then  relationships that we have, personally, everybody can look each other in the eye and say "I understand." You never know if those "business decisions" you're making are right, and if any of us are the object of being taken out of our job responsibility, and we don't think it's right, then you have difficulty with that. But I don't think that it comes to any question about motives. Taking in the case of New Line, Bob and Mike [Lynne, Shaye's co-chairman], they knew why, as we discussed it for some time. They knew what the reasons were and what responsibilities I thought and we thought we were trying to meet by doing this. And all of us, me and them, had a fairly sober concern for the effect of it on all the people in New Line, most of whom lost their jobs. That's not something anybody does lightly—and that's just New Line. Look at AOL, our management at AOL, [C.E.O.] Randy [Falco] and [president] Ron [Grant] and their team, and we here at Time Warner have had to make this strategy shift where we have removed from AOL about a billion-and-a-half dollars of costs. Well, some large part of that cost was salaries for our people, and they don't have jobs as a result of it.

L.G.: But some of those people you know and work with and have strong relationships with, versus, you know, thousands of employees.
 
J.B.: It's really, though, the same responsibility either way. I mean, you don't have less responsibility to people you don't know, if you're responsible for their livelihood.
 
L.G.: So you suggest I check back with you in two years when the world will be different and everything will be chugging along?
 
J.B.: I think it won't take that long, Lloyd. I think you should come back before that.
 
L.G.: Okay. When the stock will be at $26.
 
J.B.: We're going to make progress considerably faster than that.