(Adds details on agreement, background on the companies)
By Liana B. Baker
April 23 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
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
Popular streaming service HBO Go will also be available on
Amazon's Fire TV, a new Internet-based TV device, by the end of
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)