The cable bundle is taking another step towards rebuilding.
Warner Bros. Discovery and Charter Communications announced Thursday that the companies have entered into a multi-year early renewal agreement that will make Max plans, including HBO content and Discovery+, available to customers at no extra cost with the Spectrum TV Select package.
This marks the first time that HBO programming will be offered in the standard cable bundle rather than as an add-on.
Charter and Warner have some things in common: Cable mogul John Malone and the Newhouse family, owners of CondĂ© Nast, are the largest investors in each company. Malone sits on Warner’s board and stepped down as a board observer for Charter earlier this year. Both Newhouse members stepped down from Warner’s board amid a Department of Justice investigation into their ownership of media and cable companies.
Both sides had incentives to make the deal. Charter said in July that it lost 393,000 residential pay-TV subscribers in the most recent quarter, up from 189,000 fewer customers in the same period last year, and that its video revenue was down 7.7 percent year over year. The new deal with Charter also freezes TNT’s rates, softening the blow for Warner Bros. Discovery, which is likely to lose the NBA next year (it’s currently suing the league over the rights package).
“This innovative partnership with Charter recognizes the value of our linear content and investment in premium original programming, sports and news, while also significantly expanding the distribution of Max’s ad-supported service to Spectrum’s millions of Select customers,” said David Zaslav, CEO, Warner Bros. Discovery.
Zaslav added: “We entered into this agreement almost a year ago to set the framework for the future, provide more consumers with access to our unparalleled content, while at the same time increasing our resilience as the industry evolves, and we are pleased that it has achieved each of our objectives.”
“We believe that by including ad-supported versions of Max and Discovery+ at no extra cost in our most popular packages, we are able to deliver the most value to our customers,” Charter CEO Chris Winfree added.
While the streaming additions are the highlight of the deal, the linear pay-TV pact also includes expanded Spectrum distribution of Warner’s channels, including TNT, CNN, Food Network, HGTV, TLC, Discovery, TBS, Adult Swim and Investigation Discovery.
The early renewal agreement with WBD follows a similar multi-year deal Charter struck with AMC Networks this month to offer AMC+ at no extra charge to its Spectrum TV Select customers. Since its groundbreaking partnership with Disney last September to offer ad-supported Disney+ to its Spectrum TV Select customers, Charter has struck a series of deals with major studio conglomerates, including Paramount Global and TVS Univision, to include services like Paramount+ and Vix in their bundles.
Charter said that after its deal with Warner for Max and Discovery, Spectrum TV Select customers will get about $60 worth of streaming services per month included in their package at no extra charge.
“We now feel like it makes more sense to roll video fees into the broadband fee because there is real value behind it,” Charter CEO Winfree said at a Goldman Sachs conference on September 11. “I think we can leverage the Internet in a very similar way to what cable has done historically… so you’re going to see more of that. But I don’t think sitting back and waiting for what we know will happen is the right strategy. I think we need to be more aggressive.”