HBO Subscribers Decline

Time Warner blames promo activity by affiliates

By Jon Lafayette -- Broadcasting & Cable, 11/3/2010 11:17:03 AM

HBO Inc.'s subscriber base is down by 1.5 million since the end of last year, but parent company Time Warner says that the premium cable channel will still report record revenues and profits.

Time Warner CFO John Martin, speaking on the company's earnings conference call Wednesday morning, said the decline came from unusual promotional activity by two distributors. A promotion that created non-revenue generating subscribers to HBO's Cinemax channel at Dish Network ended.

And he said that there are declines at another major distributor where HBO is out of contract. That distributor has previously reported to be DirecTV, which is no longer promoting HBO to its subscribers. Martin said he expected the situation to be "resolved in a positive way in the near future."

Martin said that the economy is not helping HBO because household formation has declined. But he added that the bulk of the subscriber losses have been non-revenue generating, while the revenue-generating subscriber base has been stable.

Martin also said HBO is seeing no evidence of cord cutting and that it is seeing increasing penetration from distributors and affiliates focused on premium TV.