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WBD scored a crucial cable deal — by making HBO free for millions of people
By Peter Kafka,James Faris,
5 hours ago
Warner Bros. Discovery reached a head-turning deal with the pay-TV distributor Charter.
The deal means millions of Charter subscribers will get a version of WBD's Max service for free.
In exchange, Charter will keep carrying WBD's troubled cable channels, like TNT.
Warner Bros. Discovery just got a much-needed win — with a significant catch.
The troubled media conglomerate has signed a deal with Charter , one of the biggest pay-TV distributors in the country, that will keep all of WBD's cable channels, including TNT and Discovery, in Charter's system.
That's a surprise for two reasons. For starters, Charter and WBD's existing deal isn't set to expire for a year. More important: Since WBD looks likely to lose its rights to carry the NBA , observers expected WBD to have a difficult time getting pay-TV operators to carry its channels — or at least see them play real hardball when it came to price, since WBD was losing valuable programming.
But this early deal has a wrinkle. To make it happen, WBD had to make a significant concession: It will let Charter provide the ad-supported version of its Max streaming service — the thing most people used to call HBO — for free to most of Charter's subscribers.
Charter will end up paying WBD for the right to give away Max with ads (as well as Discovery+, WBD's much-less-popular streamer), which sells for $10 a month . So WBD isn't exactly giving Max away. But by making a version of Max free to millions of Charter subscribers, it is basically inviting existing Charter/Max subscribers to trade down.
The deal shows how much pressure both TV networks and pay-TV distributors are under to get deals done while there's still time to keep doing deals. Because it looks like the bottom is falling out of the pay-TV ecosystem .
The deal is also quite similar to one Charter reached with Disney a year ago, when Disney agreed to let Charter give away an ad-supported version of Disney+, along with ESPN+, in exchange for Charter continuing to distribute many of Disney's traditional cable networks.
Analysts called that deal a win for Charter. But this time around, Rich Greenfield, a LightShed analyst, called the deal a "victory" for WBD, given the weakened position of its cable channels.
"Nobody had faith in Zaslav/WBD to get a Charter deal done, especially a deal that was not even up for an entire year," he wrote.
The timing of the deal is fascinating. It comes as WBD and Comcast, another of the country's biggest pay-TV distributors, are talking about a deal to replace one that expires at the end of the year. Meanwhile, DirecTV and Disney are battling in a standoff that has taken Disney's channels away from DirecTV's 11 million subscribers.
Correction: September 12, 2024 — An earlier version of this story misstated which position Malone stepped down from. He retired as a director emeritus at Charter, not from his role on Warner Bros. Discovery's board.
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