Just about a quarter-century ago, when Peter Liguori laid out his vision for the FX network during the meeting that eventually resulted in my joining his team, he described his burning desire in two words: “free HBO”. Liguori had some idea what he was talking about; after all, he was a key part of their marketing team during an era that saw it establish itself as a destination for quality original series that eventually became industry-shattering commercial hits to boot. The only thing was, as a pay network, an advertiser couldn’t buy a commercial spot no matter how high their ratings went.
The gleam in his eyes when he romanticized about how simple a sale would be if one could walk into an advertiser and say “Imagine your message could be seen in a program as engrossing and successful as THE SOPRANOS or SEX IN THE CITY” was compelling. Only a few minutes after that would he confess that “we have the distribution; all we need now is the show”. Not everyone he was recruiting was sharing his confidence that such a seemingly herculean feat could be pulled off. But since at the time I needed a professional change nearly as badly as my recent divorce, and we were both still reeling from the Mets’ Kenny Rogers allowing the hated Atlanta Braves a walk-off walk that ended their playoff run in Game 6 of the NLCS, I was slightly more malleable than most.
I know you know how it all worked out for all of us. And that includes HBO, which continued to dominate audience within its footprint and overall industry awards for decades. and is still among best in class despite the many changes in personnel and technology that the past 25 years have seen. HBO continued to be the gold standard for commercial-free content.
Until yesterday. As THE HOLLYWOOD REPORTER’s dynamic duo of Erik Hayden and Alex Weprin reported:
The cable bundle is taking another step toward rebuilding itself.
Warner Bros. Discovery and Charter Communications said Thursday that the companies have inked a multiyear early renewal agreement that will see a tier of Max, including HBO content and Discovery+, be made available to Spectrum TV Select packages without an extra fee for customers. It marks the first time that HBO programming will be available in a standard cable bundle, and not sold as an add on.
And as the counterpart team of Peter Kafka and James Faris of BUSINESS INSIDER offered up, this was a surprising turn of events:
The troubled media conglomerate has signed a deal with Charter, one of the biggest pay-TV distributors in the country, that will keep all of WBD’s cable channels, including TNT and Discovery, in Charter’s system.
That’s a surprise for two reasons. For starters, Charter and WBD’s existing deal isn’t set to expire for a year. More important: Since WBD looks likely to lose its rights to carry the NBA, observers expected WBD to have a difficult time getting pay-TV operators to carry its channels — or at least see them play real hardball when it came to price, since WBD was losing valuable programming.
But as the REPORTER’s pair more insightfully noted, this may have resulted from a situation where a couple of estranged relatives caught each other at similarly challenged times:
Charter and Warners share some links, with cable mogul John Malone and Condé Nast owners, the Newhouse family, being among the largest investors in each company. Malone sits on the board of WBD and stepped down as a board observer from Charter earlier this year. Two members of the Newhouse family stepped down from the WBD board due to a Department of Justice inquiry into the ownership of both the media company and cable company.
Both sides had incentives to make the deal. Charter disclosed in July that it lost 393,000 residential pay TV subscribers in its latest quarter, compared with a loss of 189,000 customers in the year-ago period, with video revenue down 7.7 percent year-over-year. And this new deal with Charter also locks in rates for TNT, softening the blow to Warner Bros. Discovery as it is likely to lose the NBA next year (the company is currently suing the league over a rights package).
BENZINGA’s Anusuya Lahiri provided further context:
Max and Discovery+ will serve as a growth catalyst for Spectrum’s bundle proposition, offering nearly $60 per month of retail DTC value included when added to Disney+, ESPN+, Paramount+, AMC+, BET+, and Vix. Charter Communications will also partner in the marketing and distributing Warner Discovery’s Max and Discovery+ streaming services and receive a share of the revenue from new customers it wins…Both the company stock prices gained after the revelation.
And that’s what produces gleams in a media leader’s eyes these days, especially those of the chaps running WBD and Charter. Per Hayden/Weprin:
This innovative partnership with Charter recognizes the value of our linear content and the investments we’ve made in premium original programming, sports and news, while also significantly expanding the distribution of Max’s ad-supported service to Spectrum’s millions of Select customers,” said David Zaslav, CEO of Warner Bros. Discovery.
Zaslav elaborated, “We did this agreement together nearly a year early to set a framework for the future and to provide more consumers access to our unparalleled content offering while giving the industry more resilience as it evolves. We are pleased this achieves each of our company’s objectives.”
Charter CEO Chris Winfrey added, “The inclusion of the ad-supported version of Max and Discovery+ in our most popular packages at no additional cost ensures we provide the most value to our customers.”
Do note we eschewed our usual “Yosemite Zas” reference this time around, because as Kafka and Maris further noted, this deal already has at least one even more skeptical observer–who I strongly suspect has real money in these declining stocks–singing his praises:
(T)his time around, Rich Greenfield, a LightShed analyst, called the deal a “victory” for WBD, given the weakened position of its cable channels. “Nobody had faith in Zaslav/WBD to get a Charter deal done, especially a deal that was not even up for an entire year,” he wrote.
It would be easy for purists and romanticists to lament this as a grim reminder that the HBO we revered is now more than ever a thing of the past. But do note that its MAX iteration, even after four years of tinkering, still lags well behind its competitors in overall subscribers (54 million per online sources) and far below the likes of Prime Video in those capable of receiving ads. By limiting the Charter through-the-box offer to merely the ad-supported version, considering as of 2Q24 Charter has 12.7 million residential customers, even a 50% adoption of this new wrinkle will materially move the needle for MAX, while it also will at least keep TNT a viable companion piece with at least second window potential.
And considering all this happened on a day when the value of TNT’s deal with the Mountain West Conference to air college football may have been mortally wounded with the announcement that four of that conference’s more prominent schools–Boise State, San Diego State, Colorado State and Fresno State–are joining up with Oregon State and Washington State to try and revive what was once the Pac-12, getting any deal for the likes of TNT done with a major MVPD in this climate is especially fortuitous.
That does mean that newly installed networks czar Channing Dungey may now have to grow and accelerate whatever plans she may have had to reinvigorate that network, a task that’s at least as daunting as what Liguori and the rest of us were tasked with lo so many years ago. She’d be well served in picking our brains as to how to pull that off, because, as we all learned the hard way, it isn’t strictly about the quality of the shows and the talent behind them.
Now, thanks to the events of yesterday, she can’t even play the “Free HBO” card. That’s already taken.
Until next time…