Is HBO giving up on its India market?

It will be handing over channels to Turner and STAR India before shutting operations

From January 1 next year, everything to do with HBO's basic channel - marketing, programming, ad sales and distribution - will be handled by Turner International India. And, from July 1, everything to do with its premium channels HBO Defined and HBO Hits will be handled by STAR India. For all practical purposes, HBO, the firm behind shows such as The Newsroom and Game of Thrones, will cease operations in India and simply licence out its channels. Some of its India employees may be absorbed into STAR India, say sources within the Indian television sector.

"There will be a change in distribution partnerships and we will be putting out a release on that. Other than that, we cannot comment on speculation," says Monica Tata, managing director, HBO India.

Siddharth Jain, senior vice-president and managing director (South Asia), Turner declined to comment. While Sanjay Gupta, chief operating officer, STAR India was not available for comment, HBO Asia Chief Executive Officer, Jonathan Spink, did not respond to an e-mail seeking comment.

A major pay TV operator confirmed the deal with STAR India.

HBO, owned by the $29.8-billion Time Warner Corporation, Turner's parent, has always operated independently. It has used licensing deals with major studios and invested in award winning television shows to create a very profitable pay TV business. In 2013, it logged $4.9 billion in revenue and $1.6 billion in operating profits globally.

Launched in India in 2000, its distribution and ad sales were outsourced over the years to Turner, Sony-Discovery's OneAlliance and, subsequently, Turner again. Through these years, HBO continued to handle its own programming and marketing. But getting pay revenues, which drives its business globally, has always been an issue in the Rs 43,000-crore Indian television sector. India is, arguably, the only market where HBO was dependent on ad revenues.

In early 2013, two premium channels, priced at Rs 49 (standard definition) and Rs 69 (high definition), were launched, in the hope that pay revenues would become a reality. Against a reported target of two million subscribers in two years, the number of subscribers of HBO's premium channels, at the end of 22 months, stood at 500,000. Though this was good, given the difficult pay TV environment in India, HBO wasn't happy. It had poured in a lot of money into carriage fees and marketing support for these two channels.

The timing of the company's latest move is odd, considering digitisation has been pushed through in India and should come to fruition in a couple of years. That means pay revenues could become a reality soon.