Time Warner boss Jeff Bewkes is planning to get tough with HBO’s pay-TV partners, The Post has learned.
Under pressure from Wall Street to turbo-charge growth in every unit, Bewkes will press distributors when renewing deals to share more of the proceeds from HBO promotional subscribers, sources said.
Cable, satellite and telecom partners get to collect the most subscriber revenue if they can add accounts beyond a certain level.
They are known on Time Warner’s books as non-revenue-generating subscribers and are estimated to account for 10 percent to 15 percent of the 43.4 million HBO/Cinemax subscribers in the US.
“The upside [the partners are] enjoying now, HBO will look to share in re-negotiations,” one source familiar with HBO’s thinking told The Post.
Each partnership deal differs as to threshold promotional levels, but in each case, HBO will look to claw back a bigger percentage of total subscriber revenue, the source added.
Bewkes might be well-armed for such a confrontation as video subscribers are disappearing fast at most cable operators and HBO is becoming a more powerful tool in keeping them around.
While the premium-TV category has been growing subscribers, the pay-TV universe lost a quarter of a million households.
On Time Warner’s last earnings call in April, CFO Howard Averill noted: “Our domestic subscriber trends remain positive, and similar to the past few quarters, the majority of recent subscriber additions have been non-revenue-generating. So, while that’s a good barometer of consumer demand for HBO, subscriber growth did not have a material impact on our revenue.”
That situation — growing demand, stagnant revenue — has raised some concern among Wall Street analysts, including Guggenheim Partners’ Michael Morris, who wants to know why HBO revenue, which grew only 4 percent in 2013, isn’t rising as fast as its pay-TV rivals.
Morris believes the ad-free premium network that airs “The Newsroom,” “Girls” and “Game of Thrones” should be doing as well as ESPN, Viacom and Discovery Communications, which are all growing faster.
“HBO is one of the top businesses in media, in my opinion, and yet it has been growing revenue at a conservative mid-single-digit pace and its paying subscriber numbers have been relatively flat,” Morris told The Post.
“I believe there’s pent-up economic value to exploit,” he added.
While HBO has all the hit shows, its sibling Cinemax has seen bigger growth domestically.
HBO ended 2013 with 29.3 million subscribers, according to SNL Kagan. At year-end in 2009, HBO was at 28.9 million subscribers.
Sister service Cinemax, meanwhile, had 12.2 million subscribers in 2009 and has grown to 14.1 million in the most recent year.
The two have a combined international subscriber count of 127 million.
Bloomberg reported earlier this week that HBO is also seeking to grow revenue by bundling itself with those customers who are only seeking broadband services.
HBO declined comment on any future moves.