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No Time Like Showtime: Putting a Premium on Originals

6/23/2006 8:00 PM Eastern

These days, it’s hard to say Showtime without thinking “original.’’

Thirty years after launching as an upstart premium service in the shadow of Home Box Office, the network is charting a defining course — shifting its programming focus, more than ever, from feature films to original series such as the The L Word, Weeds and Sleeper Cell.

From iTunes to Webcasts, Showtime is also extending its brand’s reach via several broadband, wireless and interactive-television initiatives. Meanwhile, aggressive marketing and public-relations efforts have been paying off with unprecedented exposure for shows like Fat Actress and major award wins for series such as Huff.

HBO still casts a long shadow, but Showtime is heading into its next 30 years with more attention, acclaim and downright buzz than ever before

“We’re in a better position than we’ve been at any time in our 30-year history,” said Showtime Networks Inc. chairman and CEO Matt Blank.

“When I started here 10 years ago, Matt was setting a very smart course for the company,” Showtime executive vice president of creative and marketing Len Fogge said. “That course was original programming — programming that could only be done on premium.”

Responsible for developing that programming is the network’s president of entertainment Robert Greenblatt, who said that the main focus is on “series than can break out.”

All in the Family
Showtime Networks includes several channels.
Source: Showtime Networks
Premium Channels:
Showtime
The Movie Channel
Flix
Sundance Channel
Multiplex Channels:
Showtime Too
Showtime Showcase
Showtime Extreme
Showtime Beyond
Showtime Next
Showtime Women
Showtime FamilyZone
TMC Extra
High-Definition Channels:
Showtime HD
The Movie Channel HD
On Demand/PPV Channels:
Showtime On Demand
The Movie Channel On Demand
Showtime PPV

Among Showtime’s recent programming milestones:

  • Lesbian drama The L Word saw “a ratings explosion” in its third season and was up about 50% in ratings over the previous year, according to the network. The series has been renewed for a fourth season.

  • Sleeper Cell, which debuted last December, was named one of the best programs of 2005 by the American Film Institute. The series, which focuses on an Islamic terrorist cell in Los Angeles, has also been picked up for another season.

  • Weeds, a dark comedic look at suburbia, proved to be a top performer for the network in its first season. Star Mary-Louise Parker won a Golden Globe award.

  • The Kirstie Alley comedy Fat Actress generated tremendous media attention and its premiere episode, which was simulcast on the Internet, reportedly got some 700,000 streams.

  • Seriocomic family drama Huff scored seven 2005 Emmy nominations and co-star Blythe Danner won the network’s first Emmy for supporting actress in a drama.

If there’s one thing all of Showtime’s series have in common, according to Greenblatt, it’s “surprising the audience. Whether termed “controversial and button-pushing” or simply distinguished by their quality writing, acting and production values, Greenblatt wants the programming to be “unlike the kind of things that you’ll see on other networks.”

Blank also believes it’s key that Showtime produce shows with an authenticity that strike a chord with viewers. “Yes, there are surprises and plot twists,” Blank said, referring to The L Word — which, along with Weeds, he characterized as one of the network’s “two biggies” of the past year — “but there’s a realness to those relationships that people watching that show obviously relate to, and not just lesbian viewers.”

TV Guide magazine senior critic Matt Roush thinks Showtime’s focus on being a “boutique” for more original series is “a smart strategy,” though the jury is still out on which of the current and upcoming crop of Showtime shows might have “the pop-culture impact that some of HBO’s have had.”

Showtime is “very much in a transitional phase,” he said. “They’re in a position to be taken seriously.”

Among the new shows that Showtime is hanging its hopes on:

  • Contemporary Cain-and-Abel drama Brotherhood, follows the colliding worlds of two brothers — one in politics, the other a gangster. Though the show premieres on July 9, it actually debuted on Showtime On Demand on June 24.

  • Crime thriller Dexter, coming in October, features Michael C. Hall (Six Feet Under) as a forensics expert who’s also a homicidal vigilante.

  • Historical dramatization The Tudors, scheduled to debut in early 2007, stars Jonathan Rhys-Meyers as a young Henry VIII. The king’s many marriages and dalliances with consorts make for, as Greenblatt put it, “the greatest soap opera that you couldn’t have made up.”

  • Also on tap are Damon Wayans’ sketch comedy show The Underground and reality documentary series Sexual Healing.

“We believe that you have to constantly have a presence in the marketplace with something important, something different that’s going to help brand us,” said Blank. “And that, I think, may be the biggest accomplishment we’ve had in the last couple years.”

Showtime’s ramping up of original programming really began back in the 1980s. Not surprising for a network that branded itself in 1998 with the tagline “No Limits” and now uses “Daring To Be Different,” Showtime has a long history of tackling controversial and potentially polarizing subjects.

In 1984, for example, Showtime premiered the sitcom Brothers which featured an openly gay main character. In 1996, it aired Bastard Out of Carolina, a controversial film dealing with child abuse after Turner Network Television decided not to broadcast it. And in 2000, the network launched Queer as Folk, the popular series about five gay men and a lesbian couple, which went on to run for five seasons.

“Showtime has always dared to be different,” Showtime executive vice president of corporate communications Richard Licata said.

The network also has long established a commitment to diversity in its programming, including African-American themed series such as Soul Food and Barbershop, and the Latino-targeted Resurrection Blvd.

Shows such as these have won Showtime several awards through the years including the National Association for the Advancement of Colored People’s Image Award, Cable Positive’s POP Network of the Year and the Gay & Lesbian Alliance Against Defamation’s Media Award.

“Our track record in shows with minorities is probably unparalleled,” said Greenblatt.

According to Miller Tabak & Co. media analyst David Joyce, Showtime is “reinventing itself following the HBO mold by generating more proprietary content.” Time will tell if the strategy will generate HBO-like numbers, in terms of revenue and subscribers.

BY THE NUMBERS

While CBS Corp. — which owns Showtime — does not break out the numbers, Joyce put Showtime Networks’ 2005 year-end affiliate-fee revenues at $992 million, and forecasts that the number will rise to $1.052 billion in 2006, a 6% increase. While those revenues include The Movie Channel and Flix, he estimates that roughly 90% of that total revenue comes from the Showtime flagship network.

From 2001 to 2005, according to Kagan Research, Showtime Networks revenue was up 9%, from $910 million to $992 million.

In February, when CBS released its fourth-quarter and full-year 2005 earnings report, CBS president and CEO Leslie Moonves said, “As Showtime continues to add high-quality programs, there is no reason it won’t become for CBS what HBO is for Time Warner [Inc.].”

In terms of subscribers, as of March 31, 2006, Showtime was reporting 14.5 million subscribers. HBO, by comparison, counts about 28 million.

“We’d love to have as many eyeballs watching these shows as we can get,” Greenblatt said. “We’re happy to be broad-based, but the shows are always going to be unique.”

Blank described the Showtime home as the most competitive — a classic early-adopter, multipay home.

“The Showtime home exists at the top of the video pyramid,” he said. “A Showtime home has more channels than an HBO home. Every Showtime subscriber has HBO. So we compete with HBO in every household. But only half of the HBO subscribers have Showtime.”

“The way to subscribers is to get more critically successful programs,” Moonves said earlier this month at a Deutsche Bank media & telecom conference. “You can be edgy, and you can be commercial.”

In terms of feature films on Showtime — for which rights can run as much as $20 million per title — Moonves said that its contracts with Paramount Pictures, Lionsgate Films and Metro-Goldwyn-Mayer Inc. expire at the end of 2007. He added that future movie deals would be handled differently, rather than having “to buy every single movie that a studio puts out.”

DOING DIGITAL

Showtime has also been pushing hard in the multiplatform and digital media space, with an eye toward building subscriber acquisition and brand awareness, as well as to create ancillary revenue streams.

“We want to bring a sense of premium to the digital space,” said Fogge, who oversees the digital media unit headed by senior vice president Robert Hayes.

Among Showtime’s new media and multiplatform milestones, Hayes said it was the first premium network to debut content on iTunes, first to stream an entire episode of a show (Fat Actress) on Yahoo, first to launch around-the-clock synchronous interactive TV, the first U.S. network to launch a mobile storefront and first to put downloadable content on Sony Computer Entertainment America Inc.’s PlayStation Portable.

“We’ve been taking a leadership position in the digital-media space for some time,” Hayes said.

Showtime has been active in interactive-TV development since 1999, according to ITV director David Preisman. Its interactive Virtual Channel on the Dish Network, which lets viewers learn more about Showtime programming via text and graphics, is now available in 11 million homes. To drive viewers to it, Showtime is running TV commercials that prompt viewers to click a button on their remote that will launch the channel.

“We’re leveraging a 30-second spot to build out marketing for us,” said Preisman.

Dish customers can also upgrade service using their remote control, rather than having to contact a call center — to date, 150,000 customers have clicked through to order Showtime.

Download on Digital
Some stats on Showtime’s digital media offerings:
Source: Showtime Networks
SHO.com avg. monthly unique visitors: 1 million
Broadband: Over 85% of SHO.com visitors access the site over a broadband connection.
Video consumption on SHO.com: 70% increase in average monthly streams since launch of SHO.com Screening Room in February 2005.
Over 15 million e-mail messages sent in 2005 to Showtime’s opt-in registered user database.
Showtime Virtual Channel on Dish Network is accessible in about 11 million homes.
Dish Network upgrades to date: Over 150,000 people ordered Showtime using their remote control.

“One thing that’s been missing from ITV is video,” said Preisman. But Showtime plans to change that with the next generation of its Virtual Channel, Showtime Interactive. “We’re creating a visual environment for exploring, as opposed to the guide that’s just names of the shows,” he said. “You get extras, behind the scenes [content], info on the cast … [and] if I’m a current subscriber, I can record our programming with a DVR.”

WEAVING IN VIDEO

On the Internet, the network’s Sho.com Web site, which is averaging 1 million unique visitors per month, launched a video “Screening Room” in 2005. With some 3,500 video assets, the Screening Room allows visitors to view series, boxing and event highlights, as well as movie trailers.

“We skew very high in broadband households,” Hayes said. “So it’s all about weaving video into all our online tactics.”

Earlier this year, fans of The L Word were invited to participate in the creation, online, of a “fanisode.” Following a weekly “scene mission” from one of the show’s writers, participants submitted original scenes that were voted on by an online community. The fanisode event generated over 3 million page views. The network has not yet decided whether to produce the script.

Blank believes that while these multiple platforms may eventually become significant ancillary revenue streams, right now their greatest value is in promoting the brand.

“Whether it’s a Web-based promotion, as for The L Word, or an iTunes promotion for Weeds and Sleeper Cell, it’s a way of increasing access to a much larger number of homes,” Blank said.