×

HBO sub growth stalls amid cable biz losses

'Thrones,' HBO Go launch help offset turmoil in pay TV market

Exclusive: The cold shoulder that consumers gave to cable and satellite operators during the second quarter has put a bit of a freeze on HBO.

The pay cabler saw its subscriber level stay virtually on par with the previous quarter, according to newly released numbers from SNL Kagan. HBO’s subscriber base eased 17,000 to 28.3 million. Showtime’s numbers were up a slight 355,000 to 20.5 million, and Starz added 200,000 to nearly 19 million.

The flat figure for HBO is mostly a reflection of a rough quarter for cable operators, which not only see seasonal softness this time of year but have the added burden of a slumbering U.S. economy that discourages increasingly expensive video packages. The six top cable and satellite ops lost more than 400,000 subs for the quarter, according to various industry estimates.

Record highs for multichannel subs in the first three months of the year helped HBO halt a yearlong slide by adding 70,000 subs, its first increase after four consecutive quarters of losses. That decrease was partly attributable to a carriage dispute with DirecTV, which triggered the tumble by withdrawing promotional support for the network.

It’s conceivable HBO could have faced a steeper loss were it not a strong quarter for the cabler. Its highly anticipated fantasy drama “Game of Thrones” bowed in April to robust ratings, followed by a broadening of the deployment of digital offshoot HBO Go the following month.

Backed by a national marketing campaign, HBO Go in particular was viewed as a big value-add to retain and attract HBO subscribers. Time Warner topper Jeffrey Bewkes touted it as such on the conglom’s earnings call for the first quarter. “To those of you who’ve seen it, you know that it represents a quantum leap in the consumer value of subscribing to HBO,” Bewkes said.

The subscriber base of pay TV networks contributes the lion’s share of their revenues, in turn a key driver to their parent companies’ bottom lines. In 2010, HBO was responsible for one-quarter of Time Warner’s profits, according to Nomura Research, while Showtime and Starz contributed slightly more than that to their respective parent companies, CBS Corp. and Liberty Media.

But even though Showtime and Starz managed modest increases, their businesses aren’t nearly as robust as HBO’s. For one thing, their subscriptions are often used by operators as free incentives to retain basic-cable packages. And even when consumers pay for them, Showtime and Starz don’t keep as much of the revenue as HBO does from its split with distributors.

To wit, SNL Kagan found that HBO pocketed an average monthly affiliate revenue per sub of $7.27 while Starz got $2.11 and Showtime, $1.72.

HBO is projected to collect nearly $4 billion in revenues from subscrptions in 2011, according to Nomura, about three times as much as Starz or Showtime. In addition, Starz and Showtime don’t have a presence internationally, whereas HBO has more subscribers abroad than in the U.S., not to mention a robust program licensing business.

Popular on Variety

More TV

  • Hailee SteinfeldTribeca TV Festival 2019 Presents

    Hailee Steinfeld Announces New Single Tied to Apple TV Plus' 'Dickinson'

    Actress, singer and producer Hailee Steinfeld is set to release a new single entitled “Afterlife” on Sept. 19, a track she created for her upcoming Apple TV Plus series,”Dickinson.” “This is a song I’m incredibly proud of, and I feel like after embodying this character, I have a more fearless approach to my writing,” Steinfeld [...]

  • Rachel Bloom

    Rachel Bloom Announces Pregnancy After Emmy Win

    “Crazy Ex-Girlfriend” star Rachel Bloom made a special announcement after winning her Emmy for best original music and lyrics — she is pregnant. Bloom announced the news backstage on Saturday at the Creative Arts Emmy Awards. She joked she had planned to reveal the news on Instagram but that doing it at the Emmys was even [...]

  • EVIL is a psychological mystery that

    TV Review: 'Evil'

    In its pilot installment, CBS’s new drama “Evil” delves into that which may lie beyond the rationally explicable. And the show itself represents something almost supernatural by 2019 standards, too: A well-made hour fueled by chemistry between its leads and a strong idea of itself. On the basis of its debut outing, which screened at [...]

  • Emmy Awards Placeholder

    Creative Arts Emmys: 'Free Solo,' 'Queer Eye' Among Big Winners on Night 1 (Full List)

    “Free Solo,” “Queer Eye,” “RuPaul’s Drag Race” and “Saturday Night Live” were among the big winners Saturday after the first night of the Creative Arts Emmy Awards at the Microsoft Theater in downtown Los Angeles. “Free Solo,” the National Geographic feature documentary that already claimed the Oscar earlier this year, lead the field on the [...]

  • Gary Cole, Christina Anthony, Tika Sumpter,

    'Mixed-ish' Team on Why 'All Stories About "Others" Are Necessary'

    The producers and cast of “Mixed-ish” are not out to tell a singular black and white story — but one that showcases and celebrates all shades in between. “It’s important for me across the board in all of my work to talk about ‘otherness’ and identity and real, grounded characters,” showrunner Karin Gist told Variety [...]

  • Shane Gillis

    Comedians Condemn Shane Gillis Over Slurs

    “Saturday Night Live” showrunner Lorne Michaels has yet to comment on the racist and homophobic remarks made by newly hired cast member Shane Gillis, but comedians and actors are expressing their condemnation on social media, some even asking that he be fired from the show.  Footage of Gillis’s podcast, “Matt and Shane’s Secret Podcast,” was [...]

More From Our Brands

Access exclusive content