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HBO chief says all subscribers are not created equal

June 2, 2011 | 10:14 am

HBO Chairman and Chief Executive Bill Nelson, who typically keeps a very low profile, made a rare appearance at an investment conference to tout the pay-cable channel's prospects and dismiss concerns that Netflix and other competitors were invading its turf.

NELSONHBO "HBO's competitive position and HBO's growth prospects are much better and much stronger than most people realize," Nelson said at the Nomura U.S. Media Summit in New York.

In regard to Netflix, Nelson said there were "stark differences" between HBO and Netflix. He stressed that HBO had premium original content and fresher movies while Netflix had an "older library" of content and much of it was not exclusive. Even so, he pointed out that HBO did better in homes with Netflix than it did in homes without it in terms of subscribers.

Though HBO's subscriber base has been flat for the last few years, Nelson says he is expecting growth this year. Rivals Showtime and Starz have seen their subscriber base improve, but Nelson tweaked them, saying much of that growth came from sweetheart deals with distributors and that although their numbers may be up, that doesn't mean a better bottom line.

"Some of the competitors have aggressively done fixed-fee deals and given the upside away for free," Nelson said, adding that "it's not bringing them additional revenue. ... All subscribers are not created equal."

Nelson continued to tout HBO Go, the pay channel's new Web service that streams all its content online and on iPads. Most distributors have signed on to carry the service, but there are still two major holdouts: Time Warner Cable and Cablevision.

A deal with Time Warner Cable could be wrapped up in a few weeks, Nelson predicted. An agreement with Cablevision, the New York-based distributor with more than 3 million subscribers, may take a little longer to complete. That shouldn't come as any "surprise" to folks who negotiate with them, Nelson said. Cablevision has a reputation for being particularly tough at the negotiating table.

Interestingly, Nelson also said HBO was not going to put as much emphasis on selling reruns of its original shows to other cable networks. In the past, HBO has done well selling hits such as "Sex and the City," "The Sopranos" and "Entourage" to basic-cable networks.

Not all of their shows, however, have performed well in repeats. The pay channel is not going to try to sell reruns of "True Blood," its hit vampire drama, because interest from potential buyers was not strong.

-- Joe Flint

Photo: Bill Nelson. Credit: HBO