For the first time, HBO will be offered to Canadians through a single national carrier, on television and online, after Bell Media struck a three-way deal that sees Corus Entertainment Inc. cede control of the popular American network's content in the Western provinces.
The arrangement is a strategic move that lets Bell take exclusive control of HBO's shows, which include blockbusters such as Game of Thrones and Girls, in all formats, from past episodes from the network's library to new seasons currently airing on traditional TV or online.
It allows the company, a division of BCE Inc., to extend the reach of its lucrative suite of pay-TV channels, which include The Movie Network (TMN) and HBO Canada, across the country. As part of the deal, Corus Entertainment will cede its rights to HBO content in Western Canada, and wind up its own Movie Network and HBO Canada channels. In return, Bell will pay Corus a $211-million cash consideration.
In the process, Bell also substantially lengthens its contract with HBO "well into the next decade," a spokesman said. And the sweeping rights included lock up another valuable slice of the premium television market, which media companies have been racing to secure. Bell signed a long-term deal with U.S. cable network Showtime last January.
The new pact sets the table for a larger digital shift, marking the first time HBO has handed over exclusive rights to air current seasons of shows through online services. That means Bell could decide to offer new episodes of HBO shows to customers who pay for its CraveTV streaming service but don't subscribe to traditional TV, following the lead of HBO Now.
But it has no plans to do so just yet.
"It's not something that I'm rushing out to do," Bell Media president Mary Ann Turcke said in an interview. But with the TV industry under huge pressure as viewers move increasingly online, "the key is going to be maximum content flexibility because that's what consumers are demanding."
"We really felt that, either way, whatever platform, it was important and smart to be aligned to the HBO brand for a long time," Ms. Turcke said.
Terms of the extension signed with HBO were not disclosed. But a long-term pact also guards against another potential threat to Canadian broadcasters: The "uncertainty is eliminated well through 2020 around the much-discussed and much-debated scenario of HBO going [direct to consumers online] in Canada," said Drew McReynolds, an analyst at RBC Dominion Securities Inc., in a research note.
But the deal comes in the midst of a major shakeup at Bell Media. The company is shedding more than 400 jobs, including 380 positions in Toronto and Montreal, with both prominent on-air talent and behind-the-scenes technical and production staff being shuffled out the door.
"We're making the moves required to ensure we can compete going forward," Ms. Turcke said. That means cutting costs to face up to the TV industry's declining revenue growth, but "also being able to make major strategic investments in the company like this HBO deal."
Even so, she insisted the HBO investment and the staffing cuts are "unrelated."
Corus has also had a difficult year, feeling the drag of weaker advertising revenue. The company aims to own and control more content, and is looking to deepen its relationship with big-name brands – which might have included HBO. But it cast Thursday's deal as an effort to zero in on the demographics that make up most of its audience.
"After an extensive strategic review of our business, we made the decision to strengthen our focus on one of our biggest growth opportunities, our powerful national media brands targeted to kids, women and families," Doug Murphy, president and chief executive officer at Corus, said in a statement.
Analysts mostly saw the move as neutral or positive for Corus, allowing it to pay down some debt while providing "a little bit of extra room to pursue [mergers and acquisitions] options," said Aravinda Galappatthige, an analyst at Canaccord Genuity Corp., in a research note.
The so-called "pay-TV market" – a legacy term describing premium channels usually offered separately on top of bundles for a fee – has long been split between east and west where HBO is concerned. But the U.S. network recently "made it known that they were interested in one national committed partner" that could promote its content across any platform, Ms. Turcke said.
Bell and HBO have a long-standing partnership to offer the network across Eastern Canada. With national reach, Bell could be more efficient at marketing TMN and HBO, and using popular shows to promote CraveTV, through the advertising network acquired in its 2013 purchase of Astral Media.
"Bell Media and HBO enjoy a partnership of shared respect and admiration," said Charles Schreger, president of programming sales for HBO. The two companies are also forming a co-production agreement.
Corus has promised to maintain its channels until Bell has the necessary new agreements in place to launch The Movie Channel and HBO Canada in the West. And thanks to the structure of the deal, the companies don't expect they will need approval from the broadcast regulators or the Competition Bureau of Canada.
Ultimately, Ms. Turcke believes HBO is "going to be good for a long time," which could provide the company with a safety blanket against the uncertainty of a TV world shaken by online competition.
"I'm really hopeful for the future," she said. "I believe that we're doing all the right things, some more painful than the others, but a deal like this one points us in the right direction."
Editor's note: An earlier digital version of this story incorrectly stated the name of Corus's channel as 'The Movie Network' and the year Bell purchased Astral Media. This digital version has been corrected.