Amazon, HBO Max on path to a new streaming deal – report

Amazon and Warner Bros. Discovery (WBD) are reportedly discussing a new distribution deal for HBO Max that could surface nearly a year after a prior deal lapsed that enabled the sale of HBO Max via the Amazon Channels platform.

According to Bloomberg, WBD (the media giant resulting from the recent merger of WarnerMedia and Discovery) and Amazon are in talks for Amazon to sell HBO Max, the premium streaming service AT&T launched in May 2020, alongside Amazon's own Prime Video service.

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A new deal could still crumble and only come together if Amazon agrees to some additional terms, including the sharing of data on viewing behavior, the report said.

Amazon yanked HBO Max in the third quarter of 2021 amid concerns that AT&T, which operated HBO Max at the time, had about sharing revenues and data when its prime focus was on selling and billing HBO Max directly to consumers. HBO Max is currently sold through the direct-to-consumer (DTC) path as well as through agreements with certain cable operators and other third-party pay-TV distributors. The decision to cut Amazon out of the loop cost HBO/HBO Max about 5 million subs.

Word that talks are underway seems to indicate that WBD, now run by former Discovery CEO David Zaslav, sees more value in cultivating distribution channels for its streaming services, which include HBO Max as well as Discovery+, than AT&T's leadership did. Bloomberg said WBD and Zaslav have "a lot of incentive" to get a deal done with Amazon to generate more revenue for paying down debt and elevating the company's flagging stock.

Illustrating WBD's interest in exploring different distribution channels, Verizon recently cut a deal to sell HBO Max via its new "+play" service aggregation platform.

Amazon is generally focused on its Prime Video service but does offer distribution and billing for several streaming services, including Starz, Paramount+, Discovery+, AMC+, Acorn TV and Hallmark Movies Now. Amazon is currently running a Prime Day promo that is selling two months of select streaming channels/services, including Discovery+, Paramount+, Noggin, Starz and Epix, for 99 cents per month for two months.

Terms could involve data sharing, trigger options for MVPDs

In a blog post (registration required), LightShed Partners analyst Richard Greenfield explored the history between Amazon and HBO and this apparent shift in thinking about third-party distribution now that HBO Max is part of WBD.

HBO management, he explains, was not originally equipped for a DTC world that came with special challenges around generating gross subscriber adds and managing retention and churn outside of its primary distribution relationships with cable operators and other traditional multichannel video programming distributors (MVPDs). That caused some angst for HBO when it first started to work with Amazon.

But today's a different day. Zaslav is running the show at WBD and Jason Kilar, the former head of WarnerMedia and a champion of the DTC model for HBO Max, is now long gone.

"While it has been less than 90 days since the creation of WBD, all signs point to a dramatic shift in strategy," Greenfield wrote. "From what we have been hearing in recent weeks, this is a very different deal than what HBO had previously with Amazon."

Greenfield said it's expected that the deal, if it goes through, will have HBO Max join Amazon Channels, enabling the service to be available through the Prime Video app. He also believes that to appease the desires of WBD, HBO Max stands to gain "more comprehensive data sharing from Amazon for viewers that subscribe via Amazon Channels and use the Prime Video app." But Amazon, he points out, will still have a complete understanding of what certain HBO Max subs are doing on its platform.

The analyst also wonders if a new deal will pave the way for some HBO Max content to become available on Freevee, Amazon's newly rebranded free, ad-supported streaming service.

Greenfield also speculates that such a deal could trigger certain most favored nation clauses that could force WBD to allow cable operators and other MVPDs to offer HBO Max content via their platforms, rather than solely through the separate HBO Max app.

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— Jeff Baumgartner, Senior Editor, Light Reading