Blank Guides Showtime Into On-Demand Era

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A 14-year Showtime Networks Inc. veteran, Matt Blank has spent the last six as the programmer's chairman and CEO. During his tenure at the top, Viacom Inc.'s premium channel has witnessed dramatic growth in terms of subscribers and the addition of a number of multiplex channels aimed at various niche audiences. Under Blank's leadership, Showtime has also ramped up production of original films and series that have garnered critical acclaim and a host of awards. Blank and the network have also been honored for diverse programming endeavors touching the African-American, Latino and gay communities with shows such as
Soul Food,
Resurrection Blvd
. and Queer as Folk. Today, Showtime is a major proponent of initiatives that support the advancement of high-definition television, assessing its role in the rapidly evolving world of subscription video-on-demand and striving to develop series fare that will capture a broader-based following. Blank recently sat down in Showtime's New York offices with Multichannel Newsnews editor Mike Reynolds to discuss these and other topics. An edited transcript follows.

MCN:
The Lennox Lewis-Mike Tyson fight was the highest revenue generator of all time. You worked with Home Box Office. Did they take more because Lewis won?

Matt Blank:
No, it was basically a 50-50 venture. We have our own relationship with Tyson. I really can't tell you what their deal was with Lewis. But the Lewis HBO-Tyson Showtime venture was basically a 50-50.

MCN:
Both fighters are coming to the end of the road, one way or the other. There's a place for the comedy and concert performances, but they don't draw big. What's Showtime Event Television's future?

Blank:
I think there will be more boxing in SET's future. I think that there will be, two, three years from now, another Mike Tyson, another Julio Cesar Chavez, another great pay-per-view draw coming along. As the pay-per-view business continues to mature, there'll be more opportunities.

The home universe is growing. Do we see huge businesses growing around music, comedy or any of those things? Not necessarily. I think it will be a slow build and one that has to happen with a lot of moving parts.

MCN:
Do you expect to see Tyson in SET's pay-per-view future?

Blank:
The most important thing is, what does Mike want to do? Does he think he still can deliver? I don't think Mike Tyson wants to fight if he can't deliver a big performance, so he has to evaluate that. We've been in business with Mike Tyson for several years and we'll see what happens.

MCN: Why did you jump into the forefront of the high-definition television movement?

Blank:
I think the fact that we're a premium service means that we should be delivering our product in the very, very best way to consumers. If that means HDTV, we're going to try to do that. An awful lot of our product is in real HDTV format or in a converted format. So it's pretty much a wide-screen experience for consumers.

MCN: How important is that? I hate watching DVDs because they're squeezed.

Blank:
You have to think of HDTV from a consumer standpoint. There have to be sets in the home. From a programming standpoint, you have to have studios and others willing to provide product in the format.

Most importantly, copyright owners like ourselves, or our suppliers, have to feel secure that our copyrights and digital signals are not being compromised. I think all of those factors have to work together, along with the consumer-electronics manufacturers and the regulatory authorities, to ensure that the economic models we've built to produce all those great programming aren't compromised.

MCN: Do you think the TV industry would get there with HDTV without Federal Communications Commission chairman Michael Powell's proclamations? There are about 3 million households with these kind of TVs.

Blank:
I think that's going to grow. I think there will be a bunch of TVs sliding under $2,000 by the end of the year, early next year. And if there's enough product there, I think you're heavier users will start buying those TVs in greater volumes.

I think chairman Powell's efforts are important in getting the industry to think together about the process. Again for Showtime and for HBO, we are premium television. So if anybody should be delivering you the product first, shouldn't it be a premium provider that you're paying for, one; and two, virtually all of our programming, ultimately, lends itself to high-definition broadcasting.

MCN: Your new series Odyssey 5 is in high def. Will that become the standard-bearer?

Blank:
I think it will. Our sister company, CBS, basically provides all the scripted parts of programming in high-def.

As the owner of a nice high-definition television, I never thought I had an interest in seeing series or sitcoms in high-def. I thought I'd love to see football and movies in high-def. When you watch [Everybody Loves] Raymond
in high-def, it's a better viewing experience.

MCN: Showtime initially looked at SVOD as a retention vehicle, more so than a new revenue stream. Has that philosophy changed?

Blank:
We think it's both. Clearly, if you look at the continuum of what people are telling you about the pay TV experience over the past 20 years, they'll say they didn't watch it enough. If you go back a decade, we began rolling out the plexes. That's given people more opportunities to see the programming in the pay TV universe, more opportunity to see it at different times, and serve special needs.

If you move from a linear channel to a nonlinear channel, or a virtual channel like SVOD, you overcome some of that basic problem that people have with pay TV. People will always say, 'Oh, what was that movie you had that month? I hear Queer as Folk
is terrific. Sorry I missed the first season.' There is that opportunity to decide what they want to see and when they want to see it.

MCN: You started out with a couple of free tests, and are now moving into a pay mode. By offering content for free like on the Internet, have you poisoned the chance for revenues?

Blank:
I don't think so. What you saw happen with the Internet, it was basically a medium that by its very nature was free. People are used to paying for cable. They are used to paying for premium TV. They are used to rate increases. They are used to paying more when digital rolled out and they could take all these services for slightly more.

I think where we're coming out is some sort of access fee to the SVOD tier, where you pay a monthly fee that's a reasonable monthly fee — it's too early to tell the exact pricing — for which they get SVOD on all the services that are on that tier.

MCN: As SVOD becomes more prominent, does linear television go away?

Blank:
I don't think so. With VCRs, nobody was going to watch television at 8 o'clock. There has been a relatively small impact on television in the past 20 years since the VCR hit critical mass.

I think people like linear television. I think a lot of people like to turn on the television and see oh it's Monday night, [Everybody Loves] Raymond
is on. Or it's Thursday night, CSI
[Crime Scene Investigation] is on.

Everybody has talked about the dinosaurs: the broadcast networks. Here we are in 2002 with people getting 300, 400 channels. PVRs. DVDs. All these things happening. And it's a business first and you sure as hell wouldn't mind owning CBS or NBC.

MCN: What are people watching on Showtime SVOD?

Blank:
One thing we have seen early is that people really are interested in series programming. Because people are used to watching series and it's very likely that if you miss a series, you want to catch up or come back to it.

We used to see this with premium TV. For someone who never had premium before, their viewership was very high the first couple of months. The product was new to them, so they were sampling more. And there was a lot of product on from previous months or years that was fresh to them.

So there's all those consumer peculiarities to when someone puts their foot into the water and in terms of how we schedule what we're offering them. I think it's too early to say what the … dense programming mix in SVOD is going to be a year from now.

MCN: Let's shift gears into subscriber mode. With the various plexes, you have about 32 million subs, showing significant growth in recent years.

Blank:
I think both in terms of subscriber numbers and financially, the past five years have been terrific for us. We think that as digital cable continues to roll out, as new products come into the mix like SVOD — as long as we can survive the sinkholes like Adelphia [Communications Corp.'s bankruptcy] along the way, we are very optimistic about the business.

MCN: What's the core number of Showtime subscribers?

Blank:
We don't break it out.

MCN: Without speaking specifically, has Showtime grown at the same rate as HBO and Starz Encore Group LLC?

Blank:
The Starz rate is somewhat deceptive because they count all those Encore subs. For us, the key dynamic is revenue because what's happening is it's almost impossible to look at ours, HBO's or Starz's growth rates, however you measure them, and come up with a level playing field.

For instance, we have shifted many of our affiliates over to household rates, as opposed to just a service rate. The financial performance you see from Viacom's cable networks group, and the financial performance that you hear about from Showtime, comes from a combination of moving people to that household rate, which is a higher rate, to a much greater value for the consumer to real growth in households and in units.

MCN: Revenue growth has been about 20 percent annually?Blank:
Viacom no longer breaks it out. Viacom reports cable networks as a sector.

MCN: Are theatricals less important to your business these days? Blank:
You have to be careful, with 'less important.' Having a bunch of big movies every month is important. The question is how many. Years ago, we had come to terms with the reality that the big feature films don't drive the category any more.

Obviously, when the Sum of All Fears
finishes it's very successful run through theaters, video, pay-per-view and makes it to Showtime next July, that's an important movie for us, and it will do very well for us. But there's not a writer in America that will write about it.

MCN: A lot of different original programming projects coming up.
Women vs. Men. True West. Stealing Sinatra
What do you look for?

Blank:
It is important for us to be different, to do subject matter that others won't do. It's important for us to do projects that are important, and projects that will attract people that wouldn't do the normal TV movie. Some projects are highly commercial. It's a mix.

True West? Was True West
a project that was begging for anybody to do? Even though it's Sam Shepard? No. But it's Bruce Willis. When was the last TV movie you saw Bruce Willis in?

Women vs. Men
is a very interesting project, about relationships and marriages. It stars Jennifer Coolidge, Glenne Headly, Christine Lahti, Robert Pastorelli, Paul Reiser. It's directed by Chazz Palminteri. An interesting mix of people. Subject matter you probably wouldn't think was a typical television movie.

So they all cross the line in some way. Is it an important piece of work? Everybody said why the hell did you do 12 Angry Men
again? Well, because it was good. It got a Golden Globe nomination. Because it was Jack Lemmon and George C. Scott. And it did incredibly for us. It was on the cover of every TV supplement that week.

MCN: You do a lot of films on budgets that are much lower than HBO, but the stars are there and they often come back to work with Showtime.

Blank:
I think [programming president] Jerry Offsay is a real smart guy. It's subject matter that the stars want to do. Bruce Willis has his own reasons for doing True West. This is tips and taxis for Bruce Willis. He's probably not going to notice the check when it hits his account for True West.

MCN: Showtime Original Pictures for All Ages has won numerous Emmy Awards…

Blank:
No one else is making these types of all-ages movies and I'll tell you, sometimes I call Jerry and say why are we calling them all-ages movies? These could be feature films.

Some of the things we've done here we're prouder of than anything else. I was thinking about this last night because we did the Devil's Arithmetic, four or five years ago, with Dustin Hoffman and Mimi Rogers producing and with Kirsten Dunst, one of the biggest stars out there now, and Brittany Murphy, who is everybody's star of the future. It was a great film adapted from a terrific book about important subject matter.

We have a movie coming up this fall called Bang, Bang, Your Dead. It just won the Nantucket Film Festival. It's about school violence and it started as a play done in schools around the country. It's going to be highly controversial, incredibly important and incredibly high-visibility, and this is an all-ages movie.

MCN: Let's talk series. What's been the response to
Street Time
and
Odyssey 5
since they started in mid-June?

Blank:
The initial ratings have been good. But the real test comes when we get six, eight weeks into it. The series area is extremely difficult. Both those series apply to a broader audience. Going broader is tough.

Soul Food, Resurrection Boulevard
and Queer as Folk
target narrower audiences. Television is the toughest business there is out there. Just any of the network executives. We're putting a lot of pressure on ourselves the next few years to be more successful with broader-based series.

MCN: Getting that broad-based hit — theSex and the City,
The SopranosorSix Feet Under— how important is that?

Blank:
You could ask any executive in television how important The Sopranos
would be to them. It's an easy answer. Look, it's a very expensive business. We have to do shows where we can make the economics work for us, and we've chosen to go the more targeted route initially and now we're trying to spread our wings a little bit.

MCN: How about
Jeremiah
?

Blank:
Jeremiah, we're coming down to the end of the first season. It's been steady. I like the show. We'll have to make a decision in the next couple of months, where we're going to go with it.

MCN:
Soul Food
is now in its third season and you've already ordered a fourth. It's your second-highest-rated show overall.

Blank:
Yeah. Soul Food
is something that works on every level of Showtime. We think it's incredibly produced. I think it's got all the makings of a hit series, a great ensemble cast, great stories. Again terrific, great people in front of and behind the camera.

It's terrific from a diversity standpoint. The African-American index is very high in our subscriber universe. They watch the show. It's a highly marketable entity.

MCN:
Resurrection Blvd.
is now in its third season, too.

Blank:
It's a similar thing for Resurrection
on many fronts. Latino cast, Latino producers, writers. There is a slightly smaller Hispanic audience within the Showtime universe. We think from a production standpoint, it's an absolutely terrific show and we'll see how we do this season. I love Resurrection Blvd..

MCN: Showtime has received awards for its diversity efforts. Is it something you personally believe in?

Blank:
We all believe in it, and I always like to switch the dialogue on that to the fact that it's been good commerce. We like to take credit for the fact that we have people in front of and behind the camera making programs for us with diverse backgrounds for diverse lifestyles. But I think it's more important for everybody to recognize in the business that this has been good business.

MCN:
Queer as Folk
has been renewed for a third year. Has it caused outrage?

Blank:
Never as much as we predicted. The gay and lesbian audience has embraced the show.

MCN: What about non-gays and lesbians?

Blank:
I think we did a very good job in the marketing of the show on several fronts. First, one of the key premises of our communications for Queer as Folk
was that there was nothing in it that you haven't seen before in heterosexual relationships. So if you're saying that that material cannot be on television because the people involved are gay, you're really making a statement that is somewhat homophobic.

MCN: Where do you and Viacom stand in working toward a gay network?

Blank:
No decision has been made. We have a number of issues to deal with. We think there is an audience emerging in its importance to advertisers. But we want to be certain that we can provide enough quality programming to satisfy that audience and not just be repurposing loads of other stuff out there.

MCN: Are there other minority groups on your horizon?

Blank:
Diversity is not just about minority groups or not just being audiences defined by their color or by their sexual orientation. When you talk about diversity, I think diversity of thought is important also.

Dirty Pictures. I thought it was great that we could win the Golden Globe for that movie because I'll tell you, I don't like those photos. I don't want my kids to see those photos. But it is a very important issue, regardless of which side you come out on.

MCN: Do you spend a lot of time talking about Viacom programming synergy?

Blank:
I don't think we do. BET [Black Entertainment Television], Soul Food, it's a natural. So we talk to them about it. I think occasionally we'll hear something from Nick or we'll send something their way.

We don't like to think that anything should go on another network just because it was on Showtime or vice versa. At Viacom, we just don't put people in a room and say gee, come up with nine different ways [of] how you're going to work together better.

MCN: What are you most proud of during your years at Showtime?

Blank:
I think I'm most proud of the programming we've created, because I think everything has trickled down from that. It allowed us to be stronger marketers and [have] stronger relationships with our customers. It allowed us to have a greater press profile and media profile, and it gave us license to start creating a brand in the consumers' mind that could live up to its expectations.

At the end of the day, I'm really awfully proud of the diverse audiences and the diverse issues we've been able to develop, reach with the programming.

I remember shortly after we premiered Queer as Folk, I got a letter from an elderly man who described himself as a gay senior citizen nearing the end of his life, and he had no friends alive anymore, and how the show allowed him to remember parts of his life that were important to him.

In a lot of things we do, we talk to audiences and other people who weren't talking to them.

MCN:
Is that what you'll be doing over the next five years? Talking to more people?

Blank:
I hope so. We're trying.

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