HBO subs not out of whack after 'Sopranos'

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The loss of Tony Soprano didn't put a hit on HBO this summer.

The network is looking as Teflon as a Mafia don according to the latest subscriber numbers, which actually rose slightly in the first full quarter since the most-watched series in HBO's history cut to black.

New data from SNL Kagan indicates that HBO's subscriber base ticked up in the third quarter by 80,000 to 28.94 million despite concerns that the series' departure would lead some portion of customers to drop their subscriptions.

While a 0.3% increase might be nothing for incoming Time Warner CEO and former HBO chief Jeff Bewkes to crow about, it still is fairly consistent with the flat subscriber levels HBO has registered during the past several years.

"It seemed like a lot of people said they were going to cancel HBO after 'Sopranos' ended," said Deana Myers, who has tracked premium cable viewing patterns for the past decade as senior analyst at SNL Kagan. "It did seem like it was going to go down."

The numbers reveal an oft-overlooked truth to the premium-cable category HBO occupies with Showtime and Starz: Original programs might get all the attention, but their effect on subscription sales isn't that straightforward. Shows like "Sopranos" really are just one variable in a more complicated equation in which subscription prices and cable-operator marketing can be even bigger factors.

Subscriber fees provide the lion's share of HBO's revenue, which SNL Kagan projects will reach $3.7 billion this year. HBO declined comment.

Since losing "Sopranos," HBO has been bombarded with bad buzz, from the flop of the series' time-slot replacement, "John From Cincinnati," to only modest returns on other new shows like "Tell Me You Love Me." Such returning veterans as "Entourage" and "Big Love" showed little growth, too.

The new data reflects the absence of any consistent correlation between pay TV tentpole originals and spikes in subscription numbers. While the 22-month stretch between the fifth and sixth "Sopranos" seasons was the only time that HBO registered small subscriber decreases, HBO experienced its biggest recent spike in first-quarter 2006 — a time when none of its flagship series were on the air.

While this gain of 365,000 subs might be partly attributable to promotion for the long-awaited sixth season of "Sopranos," network insiders have long known that it had much more to do with a DirecTV promotion during the previous quarter for its "NFL Sunday Ticket" package, which offered HBO free for that quarter.

Other nonprogramming factors — primarily affiliate marketing — continue to drive subscriber growth at the pay nets. Showtime went into an all-out push for subs this fall, initiating its deepest discount: an annual subscription plan for $7.95 a month.

The gambit worked; Showtime is expected to hit 15 million subscribers for the first time in the fourth quarter. But while having such acclaimed shows as "Dexter" and "Weeds" helps, the discounts that help lure subscribers can cut into the bottom line.

Another potential factor: Pay TV services are now hoping new multichannel service providers from the phone business like AT&T eventually will experience the same explosive growth that satellite once did. DirecTV's gains during the 1990s was hugely important to HBO's own development.

Regardless of the distribution mode, HBO isn't riding some kind of rising tide among all premium channels. HBO's own sister channel, Cinemax, and other rival, Starz, both registered small declines. Although Starz has long been heavy on theatricals, it also plans to venture into original series next year.

Programming is definitely a factor, but in HBO's case, "Sopranos" was far from its only asset. Scripted originals might be media darlings, but less glamorous schedule staples like the films derived from HBO's roster of studio outputs deals and one-off sports events like boxing could be just as big a draw as "Sopranos."

And then there is the school of thought that HBO still will feel the impact of losing "Sopranos," but it will take a few more quarters for the shakeout to occur. Or perhaps, as Myers suggests, regardless of the absence of "Sopranos," its very success has earned subscribers' trust that more good stuff is on the way.

"It says something about the brand that people want to stick with HBO," she said.

Andrew Wallenstein reported from Los Angeles; Steven Zeitchik reported from New York.
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