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Mr. Showtime Goes to Washington

6/23/2006 8:00 PM Eastern

When you think brand, think big. Showtime Networks Inc. this March announced a joint venture with one of this country's most recognizable and revered brands, the Smithsonian Institution.

For the Smithsonian, the venture represents additional revenue to supplement federal funding and a means of establishing a real television presence. For Showtime, it's about mining an unimaginable wealth of assets for programming fodder and the opportunity to be in the same room with over 100 million consumer touch points.

The joint venture, called Smithsonian Networks, this December is scheduled to kick off Smithsonian On Demand, a service that will offer documentaries, events and children's fare.

At a Glance
The Smithsonian Institution
Source: The Smithsonian Institution
Members: 2.1 million
Museums: 19
Affiliate museums: 144
Research centers: 9
Visitors (2005)
Smithsonian museums: 24.0 million
National Zoo: 2.0 million
Affiliate museums: 20.6 million
Traveling exhibitions: 4.6 million
Web site visitors: 117.8 million
Collections
Objects, artworks and specimens: More than 136 million

“The Smithsonian had thought to establish a presence on television for quite a while,” said Smithsonian Networks general manager Tom Hayden.

In the past, the Smithsonian had partnered with PBS for some programming, but had never pursued the possibility of establishing its own television channel. After discussions with several media companies and cable operators, the Smithsonian decided to partner with Showtime, which, according to Hayden, had indicated an interest well over a year ago.

Why Showtime? Because “[the Smithsonian] realized that it didn't have the production, technology or storytelling expertise to translate the experience into a television environment,” said Hayden. “Showtime, especially in the last couple of years, has demonstrated through the kind of programming that we've done that we're really compelling storytellers. We can bring to life in a very entertaining, inspiring way the experience that is the Smithsonian Institution.”

According to the terms of the 30-year semi-exclusive contract between Showtime and the Smithsonian, as related by Smithsonian secretary Lawrence Small to a House oversight committee last month, Showtime has invested “tens of millions of dollars upfront” and the Smithsonian is guaranteed at least $500,000 annually.

Hayden acknowledged that the Smithsonian has, at the outset, a 10% interest in the venture, but that its interest can increase over time.

“Since the Smithsonian is not investing any money, the percentage is unusually good,” said Small.

“[The Smithsonian is] investing the great brand name that they have,” Hayden said. “They're investing the priority access that we have to the outstanding resources that exist there.”

Those resources include 19 museums, 9 research centers, Smithsonian magazine and a trade book publisher. And when it comes to consumer reach: The Smithsonian draws more than 20 million visitors to its museums and 30 million visitors to its traveling exhibits and public programs every year. Some 7 million people read Smithsonian magazine and more than 5 million customers shop at the Smithsonian's 30 museum retail stores, restaurants and via the Smithsonian catalogue and online store.

“The Smithsonian brand will be the focus,” said Hayden. “Showtime as a branded element — you won't see it or hear it.”

Hayden expects Smithsonian Networks will have approximately 20 staffers initially, as well as a significant amount of organizational support from Showtime. Roughly half of the staff will be in Washington, D.C., where the venture is establishing its programming offices, with the remainder based in New York.

The on-demand service is expected to deliver 40 hours of programming, refreshed monthly, though that's subject to change.

And what will that programming be? “Everything from air and space to pop culture to history to sports to science and nature,” said David Royle, executive vice president of programming and production for Smithsonian Networks. “The vast majority will be first-run, original content. It will all be shot in high definition.”

Royle, who sees the joint venture as “an incredible opportunity to bring the wonders of the Smithsonian to a broader American public,” said he was already in advanced discussions with some top filmmakers to develop programming for the service.

While Smithsonian On Demand is the venture's first planned foray, more may eventually be in the offing. “Nothing is specifically planned beyond the VOD service,” said Hayden. “What we expect to do down the road will be a traditional linear video service that may or may not be advertiser supported here in the U.S. We also expect to develop services internationally.”

The seemingly win-win deal has sparked a hotbed of discussion among such unlikely bedfellows as independent filmmakers and members of Congress, who have deemed it anticompetitive because it affords the joint venture the right of first refusal to commercial projects relying heavily on Smithsonian resources.

“The fact of the matter is that there is no change regarding access to Smithsonian assets,” said Hayden. “Anybody who wants to have access still has the same access they always had. As far as the use of Smithsonian resources: Yes, it's slightly more limited. But of the 900 some odd video programs that were done in conjunction with the Smithsonian in the last 5 years, only 17 — or 2% — would rise to the level of being 'competitive' [to the venture]. That's little over 3 a year. And the Smithsonian has reserved the right to do six programs outside the venture on an annual basis. That's twice what historically rose to the level of 'competitive' to the venture.”

Royle, formerly executive vice president of production for National Geographic Television and Film, was surprised by the controversy.

“It's my firm belief that we're opening doors not shutting them for filmmakers,” he said. “The truth is there's simply not enough places for quality non-fiction television and we're creating another one.”

Showtime chairman and CEO Matt Blank concurred: “There's a certain irony because Showtime is a place where people who couldn't get their work done elsewhere always come to,” he said. “[Smithsonian Networks] is going to be a huge opportunity for filmmakers.”

November