HBO seeks streaming option in next Australian content deal

The parent company of premium US television network HBO wants flexibility in its next content deal with local media companies that would allow it to launch its own streaming service in Australia.

News Corp-controlled Foxtel and Nine Entertainment's Stan are both vying to secure an output deal with HBO, which is owned by WarnerMedia, a subsidiary of telecom giant AT&T. While a deal is viewed as critical for both companies, industry sources told The Sydney Morning Herald and The Age that no formal bids had been made.

HBO content like Game of Thrones has been a big driver of audiences for Foxtel.

Current discussions relate to parts of the deal such as 'life of series' rights, which allows a streaming service to have a program until the show isn't renewed, archived content and programs which could be suited to free-to-air television partners.

But industry sources said WarnerMedia may try to add other conditions to its deal, such as a requirement for explicit HBO branding on all shows which appear on a service, and a clause that would allow WarnerMedia to exit a commercial arrangement early and launch its direct-to-consumer platform.

Stan and Foxtel declined to comment. Stan's owner Nine is the owner of this masthead.

HBO Max streaming service is launching in the US this month but its plans for Australia have not been announced publicly. If a long-term local content deal is secured locally, it might delay plans by the US entertainment giant to launch locally, despite the company securing a local trademark for its streaming service in early February.

Television sources previously said that HBO has given Foxtel and Stan until early May to formalise bids for its content, which includes hit shows such as The Sopranos, Succession, Game of Thrones and Big Little Lies. The deal will also include Warner Bros content and a number of new programs known as 'HBO Max Originals' that are set to run on its new streaming service HBO Max in the US.

But a clause allowing WarnerMedia to exit a commercial agreement with Foxtel or Stan early would be undesirable to the local players given how critical the HBO content is to obtaining subscribers.

For Foxtel, the HBO content is a crucial component of the offering it plans to give viewers of its entertainment streaming service Binge when it launches. Foxtel has other content distribution deals in place with global entertainment giants but HBO's hits like Succession and Game of Thrones have previously been major drawcards for existing and prospective subscribers.

Foxtel has the exclusive first-run rights to air HBO content in Australia for the next two years but extending that deal would provide a safety net for the platform as it launches its latest proposition to market.

The company, majority controlled by Rupert Murdoch's News Corp, has faced competition from online streaming services including Netflix, Amazon and Disney+ before the coronavirus pandemic hit and increased pressure on the business.

Securing HBO content is also considered crucial for Stan as it maps out its long-term future. Stan and Foxtel both lost Disney content late last year when its Disney+ streaming service was launched. Stan has less than a year left on its long-term deal with Showtime, the premium channel owned by ViacomCBS.

When Stan's deal with Showtime was secured in 2016, it was described by the streaming service as "the most significant content licensing deal in recent Australian history". ViacomCBS has not explicitly expressed its intentions in Australia, but its recently renewed deal with Foxtel for Nickelodeon content is short-term and is expected to expire at the same time as Stan's Showtime content.

Sources said it is likely ViacomCBS will pull its Showtime and Nickelodeon brands from Stan and Foxtel once the contracts expire and pull them into its local streaming service 10 All Access.

Securing a long-term deal would also allow Stan's owner Nine to shift some programs better suited to its free to air TV network and its online video service, 9Now.