YouTube Made `Big Mistake' Omitting CNN From Bundle, Turner Says

(Bloomberg) -- YouTube made a “big mistake” by leaving CNN, TNT and TBS out of its new $35-a-month online TV service, the head of those networks said Wednesday.

“It’s hard to imagine an attractive package without Turner,” John Martin, chief executive officer of the Time Warner Inc. cable division, said in an interview, citing the company’s entertainment, sports, news and children’s programming.

YouTube, owned by Google, on Tuesday became the latest company to unveil a so-called “skinny bundle, ” a slimmed-down live online TV service with fewer channels at a lower price. While other such offerings -- AT&T Inc.’s DirecTV Now, Sony PlayStation Vue and Dish Network Corp.’s Sling TV -- have included Turner channels, YouTube is the first to launch without them.

Executive at media companies see new online TV services as a way to recapture consumers who have dropped their pay-TV service or never signed up at all. While the new services are offsetting some subscriber losses, Martin predicted they are going to struggle.

“They are all having a difficult time putting together optimal packages,” he said, adding that Turner is open to joining YouTube’s service. “Our strategy is still the same. We want to be in as many packages as possible.”

Media companies have built their businesses on two revenue sources: advertising and fees from pay-TV providers. They typically require cable and satellite systems to carry all of their channels, not just the most popular ones. That’s forced new TV services to be selective about which networks they carry to keep prices down. The three other skinny bundles in the market have about 2 million U.S. subscribers, Martin said recently.

AT&T Inc., which owns DirecTV and is the largest U.S. pay-TV provider, has agreed to buy Time Warner Inc. for $85.4 billion.

YouTube Assortment

YouTube will deliver an assortment of major television channels for $35 a month, starting sometime mid-June or sooner. Subscribers to YouTube TV will be able to watch the top four broadcast networks -- ABC, NBC, Fox and CBS -- and 35 or so of their cable channels, including ESPN, Disney Channel, MSNBC, National Geographic and Fox News.

YouTube subscribers won’t be able to watch anything from Viacom Inc. (Comedy Central, MTV), Discovery Communications Inc. (Discovery, Animal Planet), AMC Networks Inc., A+E Networks (History, A&E), or Turner, to name a few.

Replicating the entire cable-TV bundle would have been too costly, says Susan Wojcicki, chief executive officer of YouTube. Instead, her team targeted a selection of channels that would deliver the essential elements -- particularly live sports.

To contact the reporters on this story: Rodrigo Orihuela in Madrid at rorihuela@bloomberg.net, Gerry Smith in New York at gsmith233@bloomberg.net.

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Crayton Harrison at tharrison5@bloomberg.net, Rob Golum