(Bloomberg) -- Charter Communications Inc. cable-television customers will now get to stream HBO programming at no additional cost — the latest effort by the top pay-TV provider to adapt to the online video era.
HBO’s parent, Warner Bros. Discovery Inc., and Charter, the largest US cable-TV service, announced a new distribution agreement on Thursday that will allow subscribers to receive the ad-supported version of Warner Bros.’ Max streaming service and Discovery+ as part of their Spectrum TV Select packages, according to a statement from the companies.
The agreement, reached nearly a year before the current one expires, includes Warner Bros.’ cable channels like TNT, CNN and Discovery. The Max service features HBO programming, along with movies and TV shows from the company’s broader library.
Warner Bros. shares rose 10% to $7.66 at the close in New York, their biggest one-day gain since Discovery Inc. and WarnerMedia became a single company in April 2022. Charter climbed 3.6% to $339.03.
Cable and satellite-TV providers have been losing customers at a rapid rate as consumers shift to streaming services like Netflix and Amazon Prime Video. Charter has been looking to address the problem by including such services in its cable packages. In a major change last year, Charter negotiated a new deal with Walt Disney Co. to add the Disney+ and ESPN+ streaming services to its packages. Charter has since reached similar deals to include Paramount+ and TelevisaUnivision’s ViX service. The company said its customers are receiving almost $60 a month in value from streaming services.
Warner Bros. Chief Executive Officer David Zaslav told investors at a conference on Thursday that no cable channels were dropped as part of the agreement and the company is getting paid more for its programming. The company, which will lose rights to broadcast NBA games after the coming season, kept the fees for its TNT network flat, Zaslav said. Max should gain 6 million new customers in the current quarter, he said.
“It’s a brilliant strategy,” he said of Charter’s plans. “It gets us working together again.”
HBO, launched in 1972, has long been known as a premium cable channel, charging cable subscribers extra to watch shows like The Sopranos and Game of Thrones.
Warner Bros. launched a streaming version, HBO Max, in 2020. The name was shortened to Max after WarnerMedia merged with Discovery Inc. in 2022 and additional programming from the Discovery networks was added.
The Max streaming plan with ads costs $10 a month on a standalone basis. Charter’s Spectrum TV Select package costs about $65 a month for more than 150 channels, although the price varies by market.
(Adds stock trading in fourth paragraph, updates Warner CEO comments in sixth.)
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