UPDATE 1-HBO strikes deal with Amazon to stream shows

Wed Apr 23, 2014 12:36pm EDT

(Adds details on agreement, background on the companies)

By Liana B. Baker

April 23 (Reuters) - Amazon will begin streaming some HBO shows to its premium customers next month, the companies said on Wednesday, in a move that could lure subscribers away from Netflix Inc, a company they both compete with.

The companies said this was the first time HBO, the premium cable channel owned by Time Warner Inc, had licensed its programming to an online subscription streaming service. HBO shows are not available through Netflix.

Netflix shares fell 4.9 percent to $354.54.

HBO's top program, "Game of Thrones," and shows newer than three years old are not part of the deal. Older hit series "Sex and the City," "Entourage" and "Curb Your Enthusiasm" are also excluded because they are tied up in syndication deals on cable.

Amazon has been building up its content libraries to tap the growing appetite for online video, and its Amazon Instant Video product has been taking on Netflix. Like Netflix, Amazon has been dabbling in original programming, with "Alpha House," a comedy starring John Goodman.

Terms of the deal were not disclosed. Last June, Amazon agreed to pay more than $200 million to Viacom Inc for access to mostly children's programming from channels such as Nickelodeon. At the time, that was Amazon's largest subscription-streaming transaction ever.

Amazon Prime customers will have access to the HBO programming on May 21, but most of it will first be older shows such as "The Sopranos" and "The Wire," or a smattering of earlier seasons from current series such as "True Blood."

HBO said episodes of shows such as "Girls," "The Newsroom" and "Veep" will be not be available until three years after it shows them.

Popular streaming service HBO Go will also be available on Amazon's Fire TV, a new Internet-based TV device, by the end of the year.

While HBO is not letting Amazon get all of its wares, it shows a new willingness on the network's part to be flexible in licensing as well as a shift away from agreements with traditional cable networks. HBO's past licensing deals have been with networks such as E!, TV Guide Network and A&E.

Older seasons of serialized shows will fare better online than on traditional cable, and the Amazon deal could ultimately draw in new subscribers to the premium channel.

Time Warner broke out HBO's financials for the first time last quarter, giving investors a better picture of how the business stacks up against Netflix.

HBO's operating income rose 8 percent to $1.7 billion last year. While the unit is much more profitable than Netflix, it is growing much more slowly in terms of revenue and subscribers than the younger company.

Time Warner shares were 1.3 percent higher at $65.73, while Amazon fell 1.1 percent to $325.70. (Reporting by Liana B. Baker; Editing by Lisa Von Ahn)

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