Do HBO, Turner Share A Future Together As Streamers?

HBO and Turner: Can they live together in the streaming world?

This isn’t the first time the question has been asked. Think back to when Time Warner (owner of HBO) bought Turner Broadcasting in 1996.

Now there is a potential for more melding. What happens when you put a premium, acclaimed cable TV network that carries no advertising, as well as garnering around 100 or more Emmy trophies for each year going back seemingly forever, with a mostly mainstream ad-supported group of cable channels?

Here’s the positive news in recent years for HBO: Since 2014, HBO has maintain some subscriber growth, around 4.5 million or so. But it didn’t hit its intended bigger target: strong subscriber gains.

HBO and its digital platform HBO Now have a combined 34 million subscribers -- 24.5 million for its linear TV network, 9.5 million for HBO Now, according to MoffettNathanson Research. Together, HBO channels together have maintained a 30% penetration of pay TV subscribers over the past five years.

All this has occurred while other cable channels have seen declining penetration, even including digital extensions. For example, Turner networks continue to post declines in subscribers (including traditional and virtual pay TV distributors) at a 3.5% rate.

This begs the question going forward for Michael Nathanson, media analyst of MoffettNathanson Research: “While these challenges are principally secular in nature, one can’t miss the broader strategy here,” he writes. “HBO Max is being championed long-term, in part, at the expense of Turner’s core TNT and TBS networks.”

Nathanson has a point: AT&T’s big marketing effort in the streaming world is focused on WarnerMedia’s perhaps bigger TV brand name: HBO. The name HBO Max proves it.

AT&T is relying on the high-quality attraction of the HBO brand for consumers  -- which will have a $14 a month price tag similar to the HBO linear TV network price tag when it comes to distribution through legacy cable, satellite and telco monthly fees.

So where does Turner fit in? Details are sketchy. Yet, AT&T keeps talking about an “advertising-supported” HBO Max option, which looks to be launch after the non-advertising option HBO Max debuts.

There is big TV production backing for HBO Max. TV production unit Warner Bros. is the top studio when it comes to the 100 most popular shows in October, according to an analysis of IMDB entertainment data and company reports -- grabbing a 21% share. The nearest competitors are Walt Disney (13% share); CBS (13%); and Netflix (12%).

Will consumers note this “quality” positioning? And if so, what will they make of Turner’s network programming as part of AT&T’s overall streaming strategy?

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