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HBO Subscribers Decline

Time Warner blames promo activity by affiliates 11/03/2010 11:17:03 AM Eastern

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.

November