HBO Go Talks Move Forward

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Home Box Office chairman and CEO Bill Nelson said that the premium channel is close to nailing down its final two distributors for its online HBO Go product, predicting that at least one of the deals will be hammered out in the next few weeks.

HBO launched the HBO Go web product in February 2010, which allows subscribers to its premium channel on cable, satellite and telco video systems to access huge amounts of content online. So far, HBO has signed deals for HBO Go with every major distributor, except Time Warner Cable and Cablevision Systems.

At the Nomura Securities U.S. Media Summit conference in New York Thursday, Nelson said that negotiations are ongoing with both Time Warner Cable and Cablevision.

"We're in negotiations with Time Warner Cable. I'm optimistic that we will conclude in the next couple of weeks," Nelson said. "We are in negotiations with Cablevision - not as far along as Time Warner Cable. Maybe that comes as no surprise to people in the markets in which they operate. But in any event I'm optimistic that in the very near future we will have reached an agreement."

HBO Go is currently available to 80% of the premium channel's subscriber base and so far usage is skewing most heavily toward its own original content, Nelson said. While HBO Go is free to consumers, Nelson said that the product is most valuable as a driver of the HBO brand. And he said that consumers on its own social networking sites are making it "loud and clear" that they want the service, including Cablevision and Time Warner Cable subscribers.

"The demand is there," Nelson said.

While domestically HBO Go's primary benefit is drive subscriptions to its television service, Nelson said that internationally the company has the option to sell the service ala carte, especially when tablet computers like the iPad proliferate.

HBO doesn't have a network per se internationally, but licenses its original programming like Boardwalk Empire, Game of Thrones and The Sopranos to other channels. It is that brand recognition that Nelson said could allow the company the option to sell its programming ala carte via HBO Go, bypassing the networks entirely.

"When that technology allows us to, we're going to move swiftly and aggressively and take full advantage of that, whether from a wholesale standpoint, or if the devices allow, in a direct to the consumer model," Nelson said.

Domestically, going standalone with HBO Go isn't being considered, because of the network's strong relationship with its distribution partners and the relatively small size of the over the top market. Nelson said that HBO's current arrangements with distributors are extremely efficient for the premium network. Of the 4 million homes that do not subscribe to any pay TV service, the main target of over-the-top video service, many are "economically challenged."
"That is not the target audience for premium pay television," Nelson added.