DirecTV deal hinders a la carte HBO, report says

Terms in HBO's carriage agreement with DirecTV (NASDAQ: DTV) could hinder the Time Warner Inc. premium network's plans to extend its service to an online a la carte model in 2015, the Wall Street Journal reports.

Factoring in the possibility that HBO could launch such a product when the agreement was carved out several years ago, DirecTV's deal has certain provisions if the a la carte service were to reach 450,000 subscribers nationally or 300,000 in any specific market.

According to the WSJ, the second largest pay-TV operator in the U.S. could scale back its marketing commitments to HBO significantly if those thresholds are met or exceeded. For example, DirecTV would only be required to highlight HBO's service in customer promotions for five months instead of 11 months.

DirecTV, meanwhile, would be able to market HBO's streaming service itself.

Since HBO's deal with DirecTV expires in 2015, coinciding with the debut of the a la carte product, the issue counts more probably as a bargaining chip for the satellite carrier.

DirecTV declined comment, but an HBO spokesperson noted, "Our contracts are confidential, so we don't comment on them. However, DirecTV has been a great partner to us in the past and they will continue to be in the future."

For more:
- read this Wall Street Journal story

Related links:
HBO's Plepler: OTT service isn't 'either/or, it's additive'
It's really happening: HBO sets a la carte streaming plans for 2015
Comcast exec Burke's surprise at HBO and CBS announcements doesn't seem genuine

Suggested Articles

Contrary to what stark video subscriber losses suggest about the state of the U.S. pay TV industry, PwC said that pay TV subscribers increase in 2019.

AT&T-owned DirecTV is prepping another round of price increases that will kick in early next year for subscribers to its satellite television service.

Comcast/NBCUniversal is planning an investor day on January 16 to discuss details about its upcoming streaming service, Peacock.