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
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