WarnerMedia Sets HBO Max Distribution Deal With Charter

In a significant milestone before it launches HBO Max next month, WarnerMedia has set a deal with Charter Communications, the No. 2 U.S. cable distributor, to give its existing HBO subscribers free access to the streaming service.

Similar to Disney’s deal with Verizon ahead of the launch of Disney+, the pact with Charter expands the potential scope of subscribers for HBO Max. The $15 a month service had previously been confirmed as available to all of AT&T’s pay-TV subscribers to HBO, many of them via DirecTV. Executives at the company had long professed to be optimistic about lining up additional distribution deals. Those pacts are key drivers of subscriber acquisition as the service pursues its goal of 75 million to 90 million global subscribers by 2025, with 50 million of those in North America.

Under the deal, which is separate from linear carriage pacts for WarnerMedia networks like TNT and TBS, all of Charter’s existing HBO subscribers, including subscribers in its Spectrum Silver and Gold video packages, will automatically be given access to HBO Max at no additional charge. All remaining and new customers will be able to purchase HBO Max directly from Charter.

“Charter has been a longtime distributor of our networks and on-demand content, and a valued partner to our company,” said Rich Warren, president of WarnerMedia Distribution. “We look forward to working together to bring HBO Max to Spectrum subscribers when the product launches next month.”

Charter reported 15.6 million total video subscribers in January. The companies declined to offer guidance on the percentage of HBO households in the Charter footprint, but a fairly high proportion are assumed to be paying for HBO given Spectrum’s heavy penetration in top markets like New York and LA. Compared with top cable rival Comcast, which is starting to roll out Peacock this month, Charter does not have vast direct-to-consumer streaming ambitions, though it has recently beefed up its slate of original programming.

“We are eager to provide Spectrum customers with the highly-anticipated HBO Max offering when it makes its debut next month,” said Tom Montemagno, Charter’s Executive Vice President, Programming Acquisition. “This new premium streaming experience will be a welcome addition to Spectrum subscribers; we will offer HBO Max on a multitude of platforms for purchase by our video, broadband and mobile customers alike.”

HBO Max is coming to market during an especially packed corridor, as Disney, Apple and Comcast all bring out new streaming offerings in a six-month period in a bid to slow the momentum of Netflix and other incumbents.

Traditional media companies are balancing their traditional pay-TV interests with their desire to compete in the streaming arena. As a result, tensions have grown with distributors wary of shouldering steep fee increases during a period of secular declines in ratings and subscribers. One flare-up in the case of HBO and AT&T has been with Dish Networks, a famously restive business partner that failed to reach a compromise with HBO in the fall of 2018. HBO has remained dark on Dish ever since, the only blackout of the premium networks nearly 50-year run on the air.

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