HBO deal bolsters CraveTV against Shomi, Netflix: experts

BCE Inc.’s move to acquire exclusive rights to HBO programming on all platforms and become the sole operator of HBO Canada will make its CraveTV over-the-top (OTT) service more competitive against rivals, experts said. Having national HBO rights should “bolster the competitive position of CraveTV relative to other OTT services,” such as Netflix and Shomi, especially when CraveTV launches as a stand-alone service next year, RBC Dominion Securities analyst Drew McReynolds said in a research note. Bell Media announced the deal Thursday, stating the move gives it “the ability to deliver current-season, past-season and library HBO programming exclusively on its linear, on-demand and platforms in English and French.” This involves “exclusive subscription video-on-demand (SVOD) rights for first-run programming throughout Canada,” such the shows Game of Thrones and Girls. Besides striking a deal with Time Warner Inc.'s HBO for the exclusive Canadian rights, it paid $211 million to Corus Entertainment Inc. to waive its rights to HBO Canada and to support its expansion of The Movie Network (TNM) across the country, which involves a transition of Corus’ Movie Central and Encore Avenue subscribers in the West to TMN. McReynolds said the deal “provides greater scale for TMN/CraveTV/Bell Media to secure multi-platform rights to premium programming." Independent broadcast consultant Kelly Lynne Ashton said in a phone interview that the deal is “all about the movies, and high-profile series that will have longevity on Crave,” which is, she noted, “the kind of content that will have a long life on OTT.” As Bell makes CraveTV open to everyone, “they need profile titles to be able to attract subscribers and keep them,” and content that will allow them to compete with Rogers Communications Inc. and Shaw Communications Inc.’s Shomi and Netflix Inc.’s service, Ashton said. “In the same way that TMN and Movie Central sort of battled it out for being the premium TV service, I think there’s going to be a battle between Shomi and Crave for being the domestic OTT, up against Netflix, and having the HBO catalogue is a big boost for Crave,” she added. Gord Hendren, president of Charlton Strategic Research Inc., said in a phone interview that HBO content “is recognized as premium content, and that’s content that people often cite as content that they’re willing to pay for. So this is content that’s in demand.” He added that the deal “gives Crave another dimension, which is first-tier original content and first-tier branding from HBO.” Scotia Capital telecom analyst Jeff Fan said in a research note that “the transaction solidifies BCE's media and TV leadership position,” while also giving Bell “the flexibility to gradually shift the content to OTT when/if necessary,” he said. The deal will give Bell the “national scale to create, negotiate and deliver more premium TV programming across platforms and possibly improve their competitive positioning against other OTT providers for content renewals,” he added. Canaccord Genuity analyst Aravinda Galappatthige said in a research note that having such broad HBO rights will allow “BCE substantial flexibility in developing its OTT strategies. Essentially, BCE can use this content to further enrich its CraveTV offering and make it more competitive” against Shomi and Netflix. Peter Miller, an independent broadcast consultant and lawyer, said Bell is likely to use The Movie Network and HBO Canada as part of a multi-platform strategy. “What they’re going to try and create is if you want the best television, the best premium television, advertising-free, you need to have … HBO Canada, which is aligned with The Movie Network, and you need to have Crave.” A potential scenario is that CraveTV subscribers discover older HBO content through the streaming service and end up subscribing to HBO Canada in order to watch more current seasons, he said. Bell Media president Mary Ann Turcke told the Globe and Mail in an interview that offering new episodes of HBO shows to CraveTV subscribers who don’t subscribe to traditional TV isn’t “something that I’m rushing out to do,” the newspaper reported Thursday. That’s what HBO choose to do in the United States with its HBO Now service. Miller said that “HBO has been Exhibit A of an example of an American service that could choose to bypass the Canadian broadcasting system, and go direct to consumers,” as it has done in the U.S. This deal helps Bell by preventing such a scenario "for the foreseeable future," he noted. Galappatthige said the deal is positive for Corus because it strengthens its “balance sheet and exits a declining business. ... We have always had a negative view of the PayTV business, which was showing significant stress with heightened competition from OTT platforms like Netflix.” RBC Capital Markets analyst Haran Posner wrote in a note to investors that Corus’ move to get rid of its HBO Canada stake is in line with its objectives. “Management has likely viewed its pay TV business as 'non-core', and we are not overly surprised by the company's decision to exit pay TV altogether and focus on what Corus believes are its larger growth opportunities," such as content aimed at woman, children and families, he wrote. — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

HBO deal bolsters CraveTV against Shomi, Netflix: experts

News | November 20, 2015

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HBO deal bolsters CraveTV against Shomi, Netflix: experts

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