MediaFile

Could a Netflix-cable alliance spur HBO to go rogue?

A potential alliance between online video streaming company Netflix Inc <NFLX.O> and cable companies could spur cable television’s biggest premium player HBO to consider its options beyond the set-top box and go directly to customers on the Web.

But not anytime soon.

Analysts say Time Warner Inc’s  HBO, which has more than 28 million customers through its cable, satellite and phone partners, would be in no hurry to risk hurting their very profitable business based on a perceived threat from Netflix or any other newcomers. “Why fix it if it’s not broke,” said Standard & Poor’s analyst Tuna Amobi. “You’re virtually jeopardizing billions of dollars, it seems remote from our perspective.” People familiar with HBO executives’ thinking say this has been looked at and they ‘have done the math’ and are even more sceptical it makes sense. Yet the question, which is often asked, comes up again with the news that Netflix Chief Executive Reed Hastings has opened early talks with cable operators for a partnership.

If these Netflix talks come to fruition the alliance could start out as a billing partnership — with Netflix appearing as a line on cable customers’ bills. But the talks have also encompassed the possibility of Netflix shows one day being offered on-demand say people familiar with the talks. On a financial basis the two could not be more different. Netflix has warned investors it will likely turn in a loss this year, while HBO will likely grow its $1.5 billion in operating profits. In creative terms, Netflix is dipping its toe into producing original shows, while HBO is a record-breaking Emmy-award winner nearly every year. The concern for cable investors is that even though Netflix is still seen as a poor man’s HBO, with its package of older TV series and movies with few original shows, it will compete on a level playing field in the battle for customers’ time on a set-top box. Hastings frequently says Netflix will look more like HBO in the future. Last month, his company launched ‘Lilyhammer‘, the first of five new original series on its service and likely will look at more as it tries to give its customers reasons to stay on even as programming costs rise. But in a potential partnership with cable, Hastings focus will primarily be on pay television’s 100 million home distribution. “We believe distribution agreements with the cable providers could materially increase Netflix’s subscriber base in a relatively short period of time,” said Barclays Capital analyst Anthony DiClemente. “The question for Netflix, however, is how to reach greater scale without sacrificing all the economics to its cable partners.” Such a partnership could also lower acquisition costs and improve profitability he added. Even after guessing a fairly high overlap between Netflix’s 23 million subscribers and those homes. There would still be plenty of room for growth if Netflix is offered as some sort of discounted add-on deal to consumers. “Netflix is at a point where they are trying to get as much distribution as possible. However, I think Netflix needs the cable distributors more than vice versa,” Morningstar analyst Michael Corty said. Such a deal would not be a million miles away from something Comcast Corp <CMCSA.O> has already been announced the launch of Streampix, a Web-based extension of its on-demand programming with a wide range of older TV shows and movies. Perhaps the earliest example of how this could work is seen with the lastest version of Apple Inc’s <AAPL.O> Apple TV set-top box, which now allows users to sign up and get billed directly for Netflix through the box.

All in all,  HBO bosses might end up having to take heed from a character in their award-winning show ‘The Wire’ and  understand the “game done changed.”

Cablevision also joins Time Warner Cable with HBO Go offer

After months of speculation we now know ad nauseum that cable markets of New York and Los Angeles will soon have HBO Go, HBO’s much acclaimed online video service. New York cable operator Cablevision said on Monday it will start offering HBO Go to its HBO subscribers in the next few months. Time Warner Cable, which dominates the New York City and Los Angeles markets, made a similar announcement late on Friday.

It’s worth repeating that HBO Go’s slick Web service and extensive library of exclusive TV shows and movies is only available to verified paying HBO cable subscribers and not as a standalone service. But even then it is significant for the strategy of HBO parent — Time Warner — to counter Netflix’s rise by offering a more flexible and mobile HBO service wherever and whenever subscribers want it.

The delays to offering the service to Time Warner Cable and Cablevision subscribers, was down to money (Quelle surprise!). While cable operators recognize the importance of offering additional value to programming packages by putting authenticated programming online — beyond the traditional TV package — they don’t always feel they need to pay too much extra over what they already pay.

At the end of the day of course it’s in the interest of both parties to come to terms or customers will indeed ‘cut the cord’ and go to Netflix to watch some of their favorite four-year old shows. But if Time Warner’s Jeff Bewkes has his way that won’t include even a five-year old “Entourage” or “True Blood”.

How much will Google TV cost?

Alexei Oreskovic

Oct 4, 2010 16:39 EDT

Almost five months after telling the world about its television aspirations, Internet search giant Google is providing more details on its forthcoming Google TV service.

The first devices featuring Google TV, from Sony and Logitech, will be available this month, Google said in a blog post on Monday.

Google also listed a variety of media and technology companies whose content and services will be available on Google TV, including HBO, Netflix, Twitter and music video website Vevo.

Google’s efforts to conquer the living room represent another front in its increasing rivalry with Apple, with the two tech companies also competing in smartphones, tablets and mobile advertising.

In September, Apple announced a new, overhauled version of its struggling Apple TV product, which will allow users to rent television shows for 99 cents a pop from News Corp’s Fox and Walt Disney Co’s ABC (It probably doesn’t hurt that Apple CEO Steve Jobs is on Disney’s board of directors).

For its part, Google is pushing its partnership with HBO as one of its marquee premium content offerings.

The HBO service will allow existing HBO subscribers, who receive cable TV service from Comcast or Verizon, to watch up to 600 hours of HBO shows at their leisure. Of course, HBO already offered Verizon and Comcast customers the ability to do this on the Web – now those folks can also watch the latest episode of “Boardwalk Empire” or “Bored to Death” on Google TV.

TV Everywhere’s high priest Bewkes keeps preaching

One day soon you’ll be able to watch your TV everywhere: online, on-the-go, your phones, just about everywhere and Time Warner chief Jeff Bewkes wants you to know about it and believe it.

Bewkes, perhaps relieved to talk about something other than how best to get rid of AOL , took the opportunity on Time Warner’s first quarter earnings call to share more of his vision for how he plans to free your favorite TV shows from the shackles of the cathode ray tube box (yes, some of us still own those).

The way Bewkes sees it if you’re already subscribing to a TV channel at home, you should be able to watch it for free on broadband from any provider, wherever and whenever you want.

As he told analysts on Wednesday:

Over 90% of U.S. households already paying for television, programmers will be able to give consumers even more for their money. There’s a tremendous level of interest in TV Everywhere across the industry, and we’re working with several distributors on a trial slated for the second half this year.

But Bewkes was light on the details, such as how you overcome the technical challenge of “authenticating” subscribers’ access to programming when they might take video from one company; Internet from another and wireless connection from a third provider. Bewkes told analysts:

It seems pretty simple from the network’s point of view, it’s also pretty clear any channel network that’s got dual revenue streams has clearly got a benefit in making that channel and brand loyalty move across any platform or device because if I just speak for our company, it’s good for TNT or HBO that if you’ve got it in your home you can watch it out of your home and on (video on demand), and that we can then maintain the subscription payment you’re already making and the ad sales cross platform ability that’s in the media.

Time Warner: It’s the hits, stupid

Far be it for us to be the umpteenth person to assail Wired editor Chris Anderson’s much quoted and yet much maligned book, The Long Tail, but Time Warner would rather keep churning out more “Dark Knights” and “Harry Potters” than fiddling down its long tail, thank you very much

The Long Tail, as you may recall, argues that thanks to the digitization of content and much lower cost of distribution, content producers will see more of their sales and profits being generated by niche content i.e. the long tail of their sales graph.

But Time Warner, by many measures the world’s largest media company, says that while it is seeing more niche content sales, it would rather the humongous profits you can make with a super hit like “The Dark Knight.”

The executive charged with minding the tills,  Chief Financial Officer John Martin, told a Citi investor conference that the future of Time Warner is in the big hits — even on digital outlets like iTunes, where he said it is beginning to see sales trends getting closer to the physical stores’ with their focus on blockbusters.

As consumers have more flexibility and more control over the way they actually consume media, we see more and more of the usage going to the long tail niche content and more and more of the usage going to the long tail and more and more of the usage moving to the very very biggest hits and the biggest brands and that’s really the space we’re playing in.

Martin said his company, which owns cable networks CNN and HBO,  magazines like Time and Sports Illustrated, and movie studio Warner Bros, is seeing evidence of an increasing affinity for hits across all areas of its business.

Fewer and fewer DVDs account for more and more of sales according to Martin, the same thing is seen in magazine subscriptions with the top titles growing while some of the smaller titles slow down and more Top 10 shows are being recorded on DVRs by cable subscribers.

Holidays bring much-needed cheer to Hollywood

Paul Thomasch

Dec 29, 2008 08:43 EST

Christmas was good to Hollywood.

The top holiday movie, “Marley & Me,” sold an estimated $37 million worth of tickets during the traditional three-day weekend beginning on Friday, and overall Christmas Day sales reached $75 million, up about $10 million from last year.

While that’s good news, particularly during the downturn, it won’t be nearly enough to salvage an otherwise rough year in the movie business, as Reuters points out.

Still, Hollywood is on course for a down year. With three days left, year-to-date sales are off about 1 percent at $9.5 billion, while the number of tickets sold has slid 5.2 percent, Media By Numbers said.

“Bedtime Stories” was No. 2 for the weekend with $28.1 million and its Christmas Day haul of $10.5 million drove its total to $38.6 million, said Walt Disney Pictures. Sandler plays a man whose bedtime stories come true in real life.

“Benjamin Button,” in which Pitt’s character ages backward, did better on Christmas Day with a $12 million opening. Its weekend tally of $27 million took its total to $39 million, said Paramount Pictures.

The adaptation of an F. Scott Fitzgerald short story has racked up five nominations from the Golden Globes and eight from the Critics Choice Awards. Women accounted for 60 percent of the audience and 70 percent of ticket buyers were over the age of 25, Paramount said.

Is MySpace dreaming of a music device?

Paul Thomasch

Nov 7, 2008 09:14 EST

• Step right up and take your best shot. Think you’ve got a digital music player that can compete with Apple’s iPod? Bring it. Go ahead. Others have. Look what happened to them.

Think Microsoft’s Zune or Sandisk’s Sansa.

But one of these days somebody, somewhere is going to come up with a device that trumps the iPod. It’s only a matter of time. The question is, who will that be?

Well, one contender might just be News Corp. Its MySpace could eventually be interested in developing a player to go along with the big music venture it recently launched, it seems.

“It’s possible,” MySpace co-founder and Chief Executive Chris DeWolfe said at a conference in San Francisco when asked if the company would ever develop a player, Reuters reports. He added, however, that there are no immediate plans to make or sell such a device.

The advantage MySpace might have over others that have tried is its MySpace Music site. Launched in September with major music labels such as Sony BMG Music, Universal Music Group and Warner Music Group, the site lets users access a range of new music services, including streaming, music and ringtone downloads, videos, ticketing and merchandising.

If successful, MySpace Music could be a perfect launching pad for a digital device. Think of how iTunes and the iPod currently go hand in hand.

What’s new with the Redstone family?

Paul Thomasch

Oct 15, 2008 09:53 EDT

The Redstone family knows drama. Late last week, Sumner Redstone’s family holding, National Amusements, announced that it was making a substantial stock sale in each of its key holdings, CBS and Viacom to comply with debt covenants. 

But the sale raised questions about whether some of the proceeds from the sales were actually earmarked to fund and expansion of National Amusements movie theater business, as reported by the Wall Street Journal.

Sumner Redstone’s daughter, Shari, who runs National Amusements, issued a statement to the Wall Street Journal denying that the stock sale had anything to do with expanding the theater business.

“The implication that this stock sale was required by the operation and expansion of the company’s theater circuit is not accurate,” Ms. Redstone’s movie theater unit said in an emailed statement Tuesday. “National Amusement’s recent sale of a portion of its Viacom and CBS non-voting stock was the direct result of last week’s historic financial crisis, which included the precipitous drop in value of CBS and Viacom stock.”

Sumner Redstone has not publicly weighed in on the reason for the stock sale, and people familiar with the situation told the Wall Street Journal that he was caught off guard by the events. 

The sale — and the reason behind it — fueled more speculation about tension between Sumner and his daughter. For some time, the two have been at odds over a number of issues, including the direction of the movie theater business and her own professional goals.

Is more family drama ahead? Stay tuned.

Take cover: Forecast darkens for cable spending

Paul Thomasch

Aug 13, 2008 08:59 EDT

Anybody out there in TV land riding an Olympic buzz (NBC’s ratings have been scorching) will be brought back down to earth by these numbers from SNL Kagan.

Cable TV ad revenue is forecast to grow at just 4.7 percent in 2009, the firm says. That compares to growth of about up 10 percent for 2008, when cable has been one of the few bright spots for media.  Or as paidContent sums it up, ”This year appears bad enough for media revenues, but for cable TV, 2009 is nothing to look forward to.”

The SNL Kagan numbers back up concerns that were voiced in an article by Reuters’ Kenneth Li after Viacom’s quarterly earnings report last month.

Although the portfolios of each conglomerate varies, making sweeping generalizations difficult, what unites them is a fear that a dramatic halt in newspaper and local advertising could seep into national advertising, namely cable and broadcast networks.

It is all the more troubling because cable networks are seen riding a high as their shows vie for award nominations as aggressively as they court broadcast viewers.

Here’s what the Wall Street Journal says about the SNL Kagan report:

In recent weeks, several cable-network groups have reported double-digit ad-revenue growth in the first half of 2008, bucking the weakness in the rest of the ad market. In part, TV advertisers have been saving money by shifting dollars from broadcast to cable networks, which cost less. “But that can’t go on forever,” says Derek Baine, a senior analyst at SNL Kagan. “Cable networks are already seeing demand slow, and that trend will likely continue and get worse as broadcast networks roll out their fall season.” 

Well, there’s always booming Internet advertising.  

Even HBO needs an editor

Robert MacMillan

May 22, 2008 08:47 EDT

New York Times columnist Frank Rich plainly was missing something in his life: a creative consulting gig at a major cable network. See the release for details:

In this capacity, Rich will both initiate and help develop projects at the pay-TV network. “Frank is one of the smartest and most astute observers of popular culture, and we are thrilled that we can call upon his judgment and superb instincts,” said Plepler and Lombardo.

And the important part for ethics-types, considering Rich will stay at the Times:

Rich will recuse himself from writing about HBO and Time Warner in his weekly OpEd column, which is largely about politics and public affairs.

The New York Times covered the story as well (circles within circles!):

Andrew Rosenthal, the editorial page editor of The Times, said that he had signed off on Mr. Rich’s deal with HBO, and that the top newsroom editors and the publisher, Arthur Sulzberger Jr., were informed and did not raise any objections. “There was no concern that there was a conflict of interest, because he no longer has any connection to news coverage of HBO or any related entity,” he said.

He added that Mr. Rich has severed his connections to The Times’s culture desk, which covers HBO. He has been an adviser to that desk, and from 2003 to 2005, his column appeared in the Arts & Leisure section, rather than on the Op-Ed pages.