HBO considers launching Internet TV channel

/ Source: Financial Times

HBO, the US cable network owned by Time Warner, is mulling a new broadband internet channel that would be available to customers who also subscribe to its cable television service.

Chris Albrecht, HBO's chief executive, told the Financial Times that the company was talking to cable operators about an "HBO-like service" in which broadband customers could click on a branded menu and download the network's programming.

However, Mr. Albrecht stressed that any internet offerings would be launched in partnership with cable operators, which it relies on for subscriber fees, the main source of income for the advertising-free network famous for hits such as The Sopranos.

"What we're hoping to do is to use the brand and to use new products similar to HBO On Demand to help [cable operators] drive their broadband penetration," Mr. Albrecht said.

Over the last year, several US television networks, including ABC, CBS, NBC and Fox, have begun to offer their programs for download over the internet – either through their own Web sites, or those of partners, such as Google and MySpace. They have also sold programs for download through Apple's iTunes store.

A broadband offering would allow HBO to reach out to a younger audience - particularly university students - who are increasingly watching video online.

The network recently announced a joint-venture comedy site with its sister company, AOL, to be known as This Just In. The site, which will feature short videos produced by HBO and a blog, is expected to launch next year, and will be supported by advertising.

However, HBO executives have to balance internet distribution with its relationship with long-time cable partners, who pay the network hundreds of millions of dollars each year in carriage fees.

"They've been pretty adamant about how they're not going to distribute on the internet in the near term," said Deana Myers, an analyst at Kagan Research. "They're not going to make their distributors mad."

In the meantime, HBO is pressing ahead with another form of digital distribution – Video on Demand - which allows digital cable subscribers to watch programs when they please.

VOD now accounts for about 10 per cent of the viewing for most HBO programs, and the network believes that will increase as the service become available in more homes.

Jeff Bewkes, Time Warner's president, has touted VOD as a way for the company's cable division to compete with Apple's iTunes and other emerging forms of digital distribution.

One of its chief benefits, he said, is that the video is distributed directly to the television, rather than the computer. "Video-on-demand is by far the most powerful product in the television world," Mr. Bewkes said.