Licensing deals put brakes on HBO Max rollout in Europe

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WarnerMedia will launch its HBO Max streaming service in Europe this year but is still wrestling with lucrative licensing deals that represent the biggest impediment to its expansion in the continent’s two largest markets.

Jason Kilar, the media group’s chief executive, has global aspirations for HBO Max but cannot bring the streaming service to the UK, Germany or Italy because HBO content and some Warner Bros movies are licensed exclusively through Sky until at least 2025.

Kilar told the Financial Times he is “spending a lot of time thinking about what happens” after the Sky deal runs its course. “There is tremendous opportunity for us to have HBO Max in the UK, Germany and other markets. Of course I’m thinking quite heavily about that,” he said. 

Following Kilar’s appointment last year, WarnerMedia explored options to recast its relationship with Sky, according to people familiar with the matter, but did not pursue a contract renegotiation. WarnerMedia said that HBO Max will not be launched in these territories “during the term of this partnership”.

John Stankey, WarnerMedia’s previous chief executive who was promoted to lead parent company AT&T, struck the deal in 2019, extending a longstanding relationship with Sky and providing an influx of cash to a heavily indebted AT&T. 

However it hampered the company’s ability to expand its big bet on streaming, HBO Max, to crucial markets outside the US. Europe is the second-largest market by revenue for Netflix, which derives nearly two-thirds of its 204m subscribers from countries outside the US and Canada.

Kilar, a pioneer of streaming as the founder of Hulu in 2007, was brought in last year to mould one of Hollywood’s most valuable catalogues — spanning the Warner Bros film and television studios, the HBO network and a portfolio of cable channels — into a consumer-facing streaming platform to compete with Netflix. 

The company last year debuted HBO Max for $15 a month in the US. 

Kilar is deeply focused on a global rollout, said current and former WarnerMedia executives. The 49-year-old has said that one of his “biggest regrets” at Hulu was not launching the service internationally, which he believes held Hulu back from becoming as large as rival Netflix. 

Kilar last year turned down an offer from Discovery to license Warner programming in Latin America, according to people familiar with the talks.

In an interview, Kilar attributed AT&T’s previous decisions regarding Europe to an industry-wide “lack of conviction”. 

“Whether looking at Disney, what was then called Time Warner, any incumbent media companies . . . they didn’t get conviction about the [streaming video] opportunity globally until the early entrants [such as Netflix] did. I say that with confidence because I was in the middle of it [at Hulu], back in 2007,” he said. “Why is HBO Max not in 190 countries today? Because of that history.”

HBO has operated in Europe, Latin America and Asia for decades, licensing its programming to local broadcasters and pay-TV companies across more than 20 countries. In addition to distributing popular HBO series such as Game of Thrones, it also makes popular local-language programmes.

HBO Europe in recent years has become a competitor to Netflix in the region, pushing its own direct-to-consumer streaming service in the Nordics, Spain, Portugal and other countries. 

This will be rebranded as HBO Max in the second half of this year. A similar launch is set for HBO Max in Latin America in June, where it will enter 39 new territories.

“As a leader, I need to make sure we set a record for how fast we go global,” said Kilar. “We’re 10 months into it, and about to go from 1 to 61 countries, and we won’t stop there”.

Comcast-owned Sky has recently ramped-up its spending on original content, including through a co-production deal with HBO. To act as an aggregator of streaming services, it has also reached deals to carry Netflix, Disney Plus and Discovery Plus on its platform.

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