Time Warner's 6-Foot-8 Croatian Fights Netflix Albanian Army

(Bloomberg) -- To fend off Netflix, Time Warner Inc. is taking a page from the streaming-video giant. And it’s turning to a 6-foot-8-inch former basketball player and war refugee to make it work.

Time Warner’s Turner division, home of CNN, TBS and TNT, is planning to tailor online delivery of its channels to individuals’ tastes, tracking preferences like Netflix does before suggesting what subscribers should watch. The company behind Time Warner’s effort is iStreamPlanet, in which it bought a majority stake two years ago for $148 million.

Founder Mio Babic may not be a fan of the content it streams, but he gives Netflix Inc. credit for its technological prowess.

“What they do have is an incredible recommendation engine,” said Babic, 42, who started iStreamPlanet in 2000 after fleeing what was then Yugoslavia. “There is no doubt in my mind this is the future -- over time every user will have their own version of CNN.”

Time Warner’s planning to deliver tailor-made channels within the next few years. The idea is that TNT, for instance, will stream NBA games to some app users, while others who aren’t basketball fans get “The Last Ship” episodes instead. CNN, meanwhile, will present news based on personal preferences.

The open question is whether customization will be the trick that stops the subscriber bleed at Time Warner, which is being acquired by AT&T Inc. for $85.4 billion. Nearly all cable channels have been losing viewers with the rise of alternatives from the likes of Netflix, Amazon.com Inc. and YouTube Inc.

Albanian Army

Time Warner has come to view Netflix as a formidable rival after underplaying the threat in the past. Chief Executive Officer Jeffrey L. Bewkes famously dissed it in an interview with the New York Times back in 2010, saying the speculation that Netflix would dominate in the business was “a little bit like, is the Albanian army going to take over the world?” -- a line still making the rounds in the industry.

Now ventures with streaming know-how are hot properties. Walt Disney Co. spent $1 billion last year for a one-third stake in iStreamPlanet rival MLB Advanced Media to provide an online-only version of ESPN. Apple Inc. expressed interest in buying iStreamPlanet when the iPhone maker toyed with launching a live-TV service in late 2015, according to two people close to Babic’s company. Turner said no because it sees iStreamPlanet as crucial to its plans, the people said. Apple and Turner executives declined to comment on the matter.

Pulling off a livestream isn’t simple. It involves taking a feed, ensuring it works on devices such as Xbox or Roku, encrypting it, inserting ads, then handing it off to a third party for delivery to an internet provider -- all in real time. A crash means viewers will miss a thrilling touchdown or buzzer-beater.

“There’s no room for error,” Babic said.

Unconventional Path

IStreamPlanet right now powers the livestreams of Turner’s NBA playoffs and the March Madness tournament, as well as the apps for CNN, TNT and TBS. It provided the back-end for NBC’s online Olympics coverage and does the same for Hulu’s new live-TV service.

With customization, it’ll be behind the hundreds of versions of channels like Cartoon Network and truTV the company will have to make, and will serve different ads in each one.

Babic took an unconventional path to one of the world’s largest media companies. Born in what’s now Croatia, he left in 1995 to escape a civil war he was certain he wouldn’t survive. “Being 6-foot-8, you make a very good sniper target,” he said, half in jest. He arrived in the U.S. in 1995 with two duffel bags and $276. He’d been playing basketball since he was 12 and scouts at Montana State University recruited him after stumbling on clips of his games.

After college, he played professionally in China and Japan until his knees gave out. So he taught himself how to code and read books on business leaders like John D. Rockefeller, Bill Gates and Andrew Carnegie. Then he landed a job at the Little White Wedding Chapel on the Vegas Strip, webcasting more than 1,000 ceremonies in a year, mostly for overseas relatives.

‘Very Focused’

Babic, who became a U.S. citizen in 2009, founded iStreamPlanet at the height of the dot-com bubble. Back then, there were about 100 companies doing similar things, according to Dan Rayburn, an analyst at Frost & Sullivan who has co-authored books on the streaming-media industry. After the bubble burst, 90 percent of them shut down because they couldn’t raise money, but Babic’s company survived partly because it didn’t stretch by expanding into too many new areas, Rayburn said. “They’re very good at what they do and very focused.”

Eventually, Babic talked his way into providing webcasts for Las Vegas Convention Center vendors. That led to work for Microsoft Corp., which was helping NBC provide the first livestreams of the Super Bowl and the Olympics. IStreamPlanet has about 90 employees in Seattle and Las Vegas.

When he left the former Yugoslavia, all Babic knew was that he wanted a different future from the childhood friends who joined gangs or the army. He got it. “Eighty percent of the guys I went to school with are dead,” he said. “I have the greatest job in the world because I don’t have to pick up a gun and shoot somebody.”

--With assistance from Alex Webb

To contact the reporter on this story: Gerry Smith in New York at gsmith233@bloomberg.net.

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, David Gillen at dgillen3@bloomberg.net, Anne Reifenberg