Updated from March 5 to include potential partnerships in the sixth paragraph. <\/p>\n
NEW YORK (TheStreet) -- Liberty Media (LMCA - Get Report)CEO Greg Maffeiturned up the heat this week in the long-simmering competition between cable-TV's premium channels. <\/p>\n
In a shot at rival Time Warner (TWX - Get Report), Maffei told investors at a conference hosted by Morgan Stanley that HBO shouldn't expect to generate much demand or profit from its Internet-based standalone service, which is expected to launch later this year. <\/p>\n
Conversely,Starz (STRZA), of which Maffei is chairman through Liberty's inter-locking corporate structure, is better positionedthan HBO to see profit from alternative offerings from traditional cable-TV and satellite distributors, he said. <\/p>\n
\"It's unclear to me that there's a massive amount of over-the-top demand for HBO,\" Maffei said, expressing doubt that consumers will be willing to pay anywhere around $15 for a non-bundled premium-channel service. \"It's not clear to me that that's going to create enormous amount of incremental demand for HBO. What is clear to me is that there are people who don't want to get behind the bundle.\" <\/p>\n
In October, HBO CEO Richard Plepler announced plansto sell online subscriptions tothe channel as an Internet-based offering. The goal, Plepler said, was to win over the10 million U.S. homes that have an Internet connection but don't subscribe to pay-TV as well as the 70 million homes that get pay-TV but don't get HBO. <\/p>\n
But HBO's strategy could run into resistance from cable-TV providers who fear that the standalone offering could cannibalize their overall service, saidPivotal Research Group analyst Jeffrey Wlodarczak. <\/p>\n
\"HBO's hope is that by not being part of the more expensive digital package they will be better able to expand their market,\" Wlodarczaksaid in an e-mail. \"As HBO tries to go direct to the consumer there is no ability for HBO to capture extra margin because today distributors make no money on HBO.\" <\/p>\n
Yet HBO carries more leverage with cable-TV and satellite operators than its rivals at Starz or CBS's (CBS) Showtime, saysShahid Khan, co-founderofMediamorph, the New York-based media industry software and data provider. Time Warner will be faced with additional technology and billings related to brining HBO online, but subscriber growth will largely turn into profits. \"There are additional costs to unbundling but you can pretty much use the infrastructure that you use for your TV Everywhere structure -- it's not that much more,\" Khan said in a phone interview. \"HBO isthe highest leveraged premium channel out there, so they can afford to piss off the [cabel-TV] partners. The others, like Starz, may not be able to.\" Cable-TV distributors, Wlodarczak added, profit handsomely from Starz, and with HBO going direct through an online offering, distributors will be incentivized to push alternative packages that include premium channels. Under CEO Chris Albrecht, Starz has increased its production of original programming, including serials such asOutlander and Black Sails, following the transition amongpremium cable-TV channels from libraries of films and TV serials into networks of production and acquisitions. Premium networks such as HBO and Starz, Maffei said, should be most concerned with \"cord cutters\" who are dropping their cable or satellite services completely, and \"cord shavers,\" who are reducing their bundled services. Such consumers may consider the HBO over-the-top offering, but find that they would prefer to pay for Netflix (NFLX), which offers a wide variety TV serials, films and increasingly, its own content. An HBO spokesman declined to comment. Starz, Maffei said, may choose not to offer an online service but instead roll out a different product in conjunction with its cable, telco and satellite partners. Maffei didn't elaborate on what that project might be. That's a strategyWlodarczak said could be successful. <\/p>\n
If Starz' original content effort is highly successful \"they have the opportunity longer term to go direct and capture a lot of margin going to distributors,\" he said. \"Realistically, the best move for Starz is to be the best partner possible to their distributors.\" Must Read: Warren Buffett's Top 10 Stock Buys <\/p>\n
<\/p>\n
See the article here: <\/p>\n
Liberty Media CEO Doubts HBO Will See Much Over-the-Top Success<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Updated from March 5 to include potential partnerships in the sixth paragraph. NEW YORK (TheStreet) -- Liberty Media (LMCA - Get Report)CEO Greg Maffeiturned up the heat this week in the long-simmering competition between cable-TV's premium channels. In a shot at rival Time Warner (TWX - Get Report), Maffei told investors at a conference hosted by Morgan Stanley that HBO shouldn't expect to generate much demand or profit from its Internet-based standalone service, which is expected to launch later this year Continue reading