As WarnerMedia plans the next phase of its streaming expansion—a low-cost version of HBO Max that runs ads—it is wrestling with an unusual challenge. It can’t run ads in new episodes of HBO shows, the best known part of its programming lineup, according to several people familiar with the situation.
That’s largely a result of agreements with cable companies that carry the HBO channel, although Warner executives are also reluctant to put ads on HBO shows because they’re concerned about hurting the brand. Whatever the reason, the limitation threatens to reduce the money HBO Max could make from selling ads and, depending how Warner handles the issue, could shrink the number of people who sign up for the new version. That could be a problem for Warner and its parent company AT&T, which are betting on the streaming services to rescue Warner’s TV business from a steady decline caused by cord cutting.