House of Dragon, White Lotus to remain on Foxtel in HBO extension

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Pay TV and streaming company Foxtel is on the verge of signing another multi-year content deal with Hollywood studio Warner Discovery, a move that will give subscribers exclusive access to some of the world’s biggest shows such as White Lotus, House of Dragon, and The Last of Us.

The Rupert Murdoch-controlled media company, which owns streaming services Binge and Kayo Sports, is expected to sign a local agreement with HBO’s parent company Warner Discovery as early as this week. The deal is critical for the group’s plans to can continue to attract viewers in the upcoming years.

Show’s like HBO’s House of Dragon will continue to run on Binge for at least another couple of years.Credit:Foxtel

Multiple people familiar with the negotiations, who spoke anonymously because an agreement is not signed, said the licensing deal would continue through to 2025 at the earliest. However, an agreement with Warner Discovery is likely to expand beyond that timeline, given Foxtel’s ambitions to launch its own television product and become Australia’s leading streaming aggregator (through a project called Magneto). Foxtel boss Patrick Delany said two weeks ago the product was on track for launch later this year. Foxtel and Warner Discovery declined to comment.

HBO is widely considered the jewel in the entertainment crown: it has transformed the television industry through popular hits such as The Sopranos, The Wire, Game of Thrones which have attracted millions of viewers all over the world. Other recent shows include Succession and Euphoria among many other titles.

The company last year was considering launching its own platform locally, but going direct to consumers in every market is no longer the priority for a lot of larger US entertainment companies that are worried their aggressive pursuit of subscribers has damaged profits.

“The whole world’s changed, hasn’t it,” Delany said in an interview following the release of Foxtel’s second-quarter results earlier this month. He said the ‘throw everything into streaming’ model had proven not to work.

“We’re seeing a lot of the streamers doing exactly the same. We think that whatever decision is made, whether it’s to go over the top or continue to provide output, we’re in a very good position to work with Warner Bros.” Disney+ recently reported its first subscriber loss – 2.4 million subscribers – and announced major cost cuts across the business as it focuses on profitability.

This is the second time in a matter of years Foxtel has outbid Nine Entertainment Co and its streaming service Stan for the rights to a range of HBO programs and Warner Bros shows. The previous deal, signed in 2020, was believed to be worth up to $200 million a year at its peak.

The company also beat Stan for a lucrative deal with US studio NBCUniversal, a move which prompted Nine chief executive Mike Sneesby to fly to talk to Hollywood studios about other ways to acquire content. Nine, the owner of Stan, also owns this masthead.

When HBO bosses came to Australia late last year, Nine’s executives discussed a strategic partnership with Warner Bros Discovery, which would allow the latter to run its programs locally without having to launch a standalone service. Media sources, who requested anonymity to speak freely, said a deal with Stan would have involved handing over a major stake in the streaming service to Warner Discovery in exchange for content exclusivity.

When asked where talks were at last week, Nine’s Sneesby shrugged off concerns an inability to secure the content would hurt Stan’s long-term subscriber growth strategy. Nine has a separate deal in place with Warner Discovery for its free-to-air television channel, 9Rush.

“We’re really comfortable with the decision we made not to enter into agreements with very high pricing structures that have the ability to put a long-term cost structure into your business, ” Sneesby said. “Having said that, without commenting on any deals that are in market and the timing of those deals, a lot of these deals will come back to market over the coming years.

“What we’re seeing is they’ll come back to market…the deals that are there will end in various ways. We’ll consider all forms of partnership…commercial content relationships, joint ventures.”

Nine has recently signed two major rights deals with Tennis Australia and the International Olympic Committee, both of which showed significant price inflation.

Sneesby, who told the market on Thursday Stan had close to 2.6 million active subscribers, said he was confident with the company’s content supply. “We’ve got enough flexibility as a free agent to consider any important partnership that may come along,” he said.

Foxtel’s new deal with Warner Discovery will solidify the position of Binge in the streaming market. But it is expected to be the most expensive rights deal in local history and will add pressure to the company’s bottom line. It is the latest in a series of highly expensive deals for Foxtel with key sports including Cricket Australia and the AFL, and NBC Universal.

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