WarnerMedia’s new direct-to-consumer service will be the exclusive streaming home of the classic sitcom “Friends” as well as more than a dozen original shows and movies, as the entertainment giant sharpens its strategy to take on Netflix Inc.
The new service, HBO Max, will launch widely in the spring, following a limited launch late this year, the company said Tuesday. Beyond the company’s vast TV and movie library, HBO Max will feature original projects from stars such as Nicole Kidman, Reese Witherspoon and Anna Kendrick.
The loss of “Friends,” which is owned by the Warner Bros. studio of AT&T Inc.’s WarnerMedia, is a blow to Netflix, where the show had been streaming exclusively for years and was its second-most-watched show in 2018, by time spent, according to Nielsen. Netflix is alsolosing its No. 1 show, “The Office,”starting in 2021 when reruns of the hit sitcom move to a new streaming service being launched by Comcast Corp.’s NBCUniversal.
“We’re sorry to see ‘Friends’ go to Warner’s streaming service at the end of 2019” in the U.S., a Netflix spokesman said Tuesday. “Thanks for the memories, gang.”
Both WarnerMedia and NBCUniversal are opting to give up substantial licensing revenue to bring their hit properties back to the streaming services they are launching—which will add to the already numerous streaming platforms available to consumers, each with its own mix of content. The soon-to-launch services will compete not only with Netflix,
’s Prime Video and
’s Hulu, but also with other new streaming offerings from Disney and
Disney has also indicated it would take back shows it has sold to Netflix when those deals expire.
Netflix is currently paying WarnerMedia about $80 million for exclusive streaming rights to “Friends” this year, according to people familiar with the matter, and $100 million to NBCUniversal for its current multiyear deal for “The Office.” HBO Max will pay $425 million to carry “Friends” for five years starting in 2020, a person familiar with the terms said, in what is essentially a transaction inside WarnerMedia. Similarly, NBCUniversal’s five-year deal for “The Office” is valued at around $500 million, according to people familiar with the matter.
Guggenheim Securities analyst Michael Morris said he doesn’t think Netflix losing its two most popular shows will cause subscribers to flee. The company will be able to use the money it had spent licensing those shows to invest in original content, he said.
Mr. Morris added that WarnerMedia and NBCUniversal’s decision to bring home their hit shows made sense despite the high cost, since these shows’ success is more predictable than that of the new programming both streaming services will offer. “Pulling ‘The Office’ and ‘Friends’ back into their own service is the lowest-risk thing they are doing,” Mr. Morris said.
HBO Max will be anchored by WarnerMedia’s HBO, which already has its own streaming service called HBO Now with more than eight million subscribers.
A price for HBO Max hasn’t been set, but it is likely to be slightly more than the $14.99 HBO Now costs, people familiar with the matter said. That is higher than Netflix’s $12.99, and the Disney+ service launching in November is charging $6.99 for original and classic content including its “Star Wars” and Marvel properties.
WarnerMedia Entertainment Chairman Robert Greenblatt said in an interview that tying the new streaming service to HBO is critical because “it’s going to be a position of strength” to be aligned with “one of the great brands in television around the world.”
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Mr. Greenblatt declined to comment on the terms of the “Friends” deal but said the price was fair to the show’s financial stakeholders, known as “profit participants.”
The profit participants could seek legal recourse, and WarnerMedia could risk alienating talent if it were seen as cutting itself favorable deals. “You absolutely need to make these deals at market value, and we are doing that,” Mr. Greenblatt said.
Original content for HBO Max includes new movies from prolific producer Greg Berlanti, whose TV credits include the stalker drama “You” for Netflix and “Riverdale” on the CW Network. Mr. Berlanti is also executive producing “The Flight Attendant,” a thriller series for HBO Max that stars Kaley Cuoco, who was a co-star on the CBS show “The Big Bang Theory,” which ended its run in May.
Ms. Witherspoon, a star of the HBO drama “Big Little Lies,” has also signed on to produce at least two movies for HBO Max. Ms. Kidman, who also stars in “Big Little Lies,” is developing a drama called “Crime Farm” along with Janine Sherman Barrois, the showrunner of the critically acclaimed TNT drama “Claws.” Ms. Kidman also will star with Hugh Grant in an upcoming HBO show called “The Undoing.”
Other projects in the works for HBO Max include “Made for Love,” based on the Alissa Nutting novel and “Love Life,” a romantic-comedy anthology series starring Ms. Kendrick.
HBO Max will replace Netflix as the new streaming home for future shows Warner Bros. produces for the CW Network, which is a joint-venture between WarnerMedia and
New Warner Bros.-made CW shows “Batwoman” and the “Riverdale” spinoff “Katy Keene” that premiere on the network in the upcoming TV season will land on HBO Max in late 2020 or early 2021. CW shows currently streaming on Netflix—such as “Riverdale,” “The Flash” and “Arrow”—will remain there for several more years. Eventually, those are also expected to migrate to HBO Max.
Although WarnerMedia is reclaiming a lot of content from Netflix, the company continues to make shows for the streaming giant as well. Last week, Netflix struck a deal with Warner Bros. for “Sandman,” a series based on the DC Comics property.
“We loved it, but there were other people in the marketplace that really wanted it,” Mr. Greenblatt said, adding that in this scenario it made more sense for the company to sell to Netflix. “We don’t want to be the only outlet for Warner Bros. Television,” he said.
Write toJoe Flint at[email protected]
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