Amazon Trumps Netflix in HBO Library Streaming Deal

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April 24 (Bloomberg) -- Bloomberg’s Paul Sweeney examines Amazon’s deal securing streaming rights for some HBO programming for its Prime customers on Bloomberg Television’s “Bloomberg Surveillance.”

This deal given that there have been so many calls for hbo to loosen its grip on it contracts?

That is right, and i think it feels throwing the towel like another -- like a lot of other cable companies.

Listen, we know a lot of our viewers are actually consuming the content online, so online videos become a tremendous surge of growth for consumers.

I think hbo kind of said we have to be where our customers are going, particularly our younger demos.

"game of thrones" was the most illegally streamed program in the last few years.

It is not included in this licensing deal.

Is this deal an acknowledgment that the subscription only business model is outdated?

I don't think so.

I think subscription only is a great model for them.

It is externally profitable force hbo, showtime, and the others.

They are saying the cinema we want to preserve our existing business, but we have to make sure we are participating in a new technology, the new distribution platforms.

Is this effectively hbo saying that while it is good at content it is not good at distribution and it needs a partner?

I think it probably says our existing distribute model works just fine but that may not be the most optimal distribution model five years, 10 years from now simply because we know that the viewing, people are consuming more video online.

David kirkpatrick with us as well.

I wanted to ask you, paul, do you think netbooks and amazon had a bidding war over this content?

How much do think hbo got for it?

It has been reported that it has not been a bidding war, that hbo went right to amazon prime.

I think that is because there is bad blood between affluence and hbo.

That is not mandated not get paid a hell of a lot closer i am sure.

The deal could have cost amazon about $200 million plus.

That is just one number out there.

But you say bad blood, to me this is so emotional.

Explain the theory of your world as we respond to these distribution transactions.

Arguably the folks that are really in the driver seat that are really going to benefit from this explosion of online video and other distribution systems is hollywood, the content creators, so they're sitting back saying where can i get paid for my content?

We know they are streaming more windows, it is not just broadcast television, it is not just premium cable like hbo, it is not like online videos.

But hbo has been a role in eal innovator.

Hbo go into sleep possible.

-- hbogo is hugely popular.

They are only allowing three-year-old programs to go to amazon.

Amazon is the video is still pretty new.

It launched in 2011. apple, for instance, has been struggling to get content.

Why does that use its $150 billion in cash to get content?

For apple, it is a hobby to them.

Apple tv has been nothing to them.

Everybody in the entertainment ecosystem is way for apple to make the play and get into the business in a big way.

What would it be, come on, paul?

It is not a piece of hardware, it is not the apple tv box.

There are plenty of boxes out there.

Everybody is into that business.

The question is -- when does apple want to get into the content business?

If they want to do that and a bit way, that suggests mna.

They need to make a big acquisition.

What you are seeing is the holy grail, i think if i am hearing you correctly, a tv that does it all.

Are you having to switch to hdmi1, hdmi2, apple tv, just push a button and i get whatever i want.

When does that happen and who figures it out?

That is starting to happen now.

We're starting to see a lot of apps coming into the tv universe because like you say people do not want to play with the various different boxes.

So s smart tv's come into the marketplace and become more proficient, you will see it being driven by cap.

-- by apps.

Is your world bangingeionng driven by cheap money?

We have not talked about jenny allen.

As they stood up and go we have got to ask now before those crumpton washington screw it up?

What has been one of the main drivers of the performance in media stocks and it has been the best run i've seen in 25 years covering this sector is that media companies are returning him to tremendous amount of cash to shareholders looked up they are buying back stock, paying dividends, and part of that is because the business models are so strong and the other part is he has cash is so cheap these days that it is better to return to shareholders than to make vague acquisitions.

And it pushes up their share.

Aereo, we talk about this as though it is changing the world of tv.

What is your take on the aereo debate?

I think it is a 50/50 coin flip will stop i think the broadcasters will prevail.

I think the supreme court is going to look at it in a very narrow way and say this is something like copyright infringement.

It may be where they are going.

I think so.

Any concerns about cloud computing and what does it mean -- cloud computing at such a big part of the technology story long-term.

If you go that route, then it becomes a little more -- because we are doing a round robin here, give us an update on fox.

How is the land of murdoch doing?

Great.

He split his news corporation company into his entertainment -- it works out?

It worked out.

We know the fox story, the entertainment story will be great.

He has great entertainment networks, great at that, well the road challenging part of his conglomerate if you will is his new newspaper business, new news corporation.

Very tough.

The newspaper business remains very top.

Advertising is still in a decline.

The question is -- can the newspaper companies transition to the digital world and get paid online?

And that is where his heart is, the newspaper business.

All sweeney, thank you so much, for bloomberg industries.

Coming up, oil industry blooming.

We have got a lot of oil.

We will to how much.

This is "bloomberg surveillance." on bloomberg television, streaming on your tablet, your smartphone, and bloomberg.com.

? and don't forget apple tv.

This text has been automatically generated. It may not be 100% accurate.

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