Remember when Time Warner CEO Jeff Bewkes suggested a few weeks ago that HBO could possibly, maybe, offer an online-only option if it were, y’know, tied to cable company broadband plans? Yeah, you should forget he brought that up. Bewkes is probably hoping you already have.
The reason has less to do with HBO’s relationship with pay TV carriers than you think. Time Warner could go the Netflix route and offer HBO as online video service at the same price as its cable networks. In fact, it already has gone this route overseas. Plus, there is vocal demand for such a service. Customers would sign up for it.
But then how would Time Warner pay for the NBA on TNT?
The main reason Time Warner keeps HBO tied to cable is to get all those Game of Thrones, True Blood, and Boardwalk Empire fans to pay for all of Time Warner’s other cable channels — CNN, HLN, TBS, TNT, Cartoon Network, truTV, TCM, NBA TV, etc. Never mind whether or not HBO subscribers actually watch those other channels or not; some of them probably do. As long as HBO fans are paying for everything under the Time Warner-owned Turner Broadcasting System umbrella, Time Warner has no incentive to make HBO an online-only service.
Consider this. At last count, 28.7 million households subscribe to HBO. Let’s say all those homes also get a standard pay TV package that includes TNT. (A few might get just basic cable and HBO, but that number would likely be statistically insignificant.) That means TNT receives $1.21/month from those 28.7 million people. That adds up to $416.7 million per year, just from those HBO subscribers. That covers the estimated $330 million per year that Turner Sports pays to show NBA games on TNT — to say nothing of how many of those 28.7 million also pay for NBA TV, which Turner Sports operates.
So if 10 million people suddenly decided to cut the cord because they could pay for HBO separately from cable, that’s more than $145 million that TNT won’t be getting. That makes it a lot harder to pay for those NBA games. On top of that, TBS would make $70.8 million less, CNN would make roughly $60 million less, and all those other Turner networks would get less money as well. Sure, HBO would keep all its subscribers; it might even get more. All the other cable networks Time Warner owns, however, would get much less.
More than anything, this is a media consolidation issue. If Time Warner did not own Turner Broadcasting, it might be more inclined to make HBO an online service, rather than one tied to cable. For now, though, all those Turner networks keep HBO right where it is, and it would take something big for that to change. Would TNT losing the NBA to Fox Sports after the 2015-16 season be that something? Perhaps, but don’t expect that to happen without a fight.
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