How The Comcast/TWC Merger May Break HBO Free From Cable


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The pending Comcast/Time Warner Cable deal is about to have a huge effect on HBO’s future. The merger would free Time Warner the owners of HBO from any legacy relationship with the struggling cable company.

With the recent announcement that HBO shows will be available on Amazon Prime starting next month has thrown gasoline on a old debate. The debate has been fierce over why HBO refuses to make their content available to non cable subscribers. The recent Amazon deal now makes it clear that HBO holds the content back to protect Time Warner Cable investment. Now that Time Warner is free from any old ties to cable companies they are showing a willingness to be more cord cutter friendly.

HBO still has to honor existing contracts with cable companies but there is change in the wind. The success of the WWE Network and HBO GO have paved the way to a cable free HBO.

If HBO charged $19.99 a month HBO would only need about 24 million subscribers to get the $4.9 billion of revenue. To reach the 24 million subscribers needed HBO would only need to get just under 25% of current cable subscribers to jump sign up. Currently HBO has 28.7 million subscribers putting them ahead of the 24 million they would need at $19.99 each to be free from cable.

If HBO would keep all 28.7 million subscribers and add just 1.3 million more they could sell the service for only about $16 a month.

Clearly money has not been holding HBO back but existing contracts with cable companies. Clearly there is a movement with in HBO and Time Warner  to bring their content directly to the consumer.

 

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