LOS ANGELES (Hollywood Reporter) - Can Showtime survive on a diet of “Dexter,” “The Tudors” and “Weeds?”
That’s the question the pay cabler faces as it comes to grips with the news that Paramount, MGM and Lionsgate have joined forces to launch a rival movie channel and video-on-demand (VOD) service under Viacom’s umbrella.
Fortunately, Showtime has a little breathing room. Paramount’s releases, from 2008 and beyond, will go to the new, yet-unnamed Viacom channel set to launch in September 2009, while MGM and Lionsgate’s current supply deals with Showtime run out at year’s end. But titles that already have gone to Showtime from the three companies will play into 2011.
Although Showtime has been emphasizing such original shows as “The Tudors” and “Weeds,” it’s not discounting the need for theatricals -- after all, Henry VIII had only six wives, and eventually “The Tudors,” which has been renewed for a third season, will run its course.
Even though it’s losing three major film suppliers, the premium service insists that there’s plenty of options to flesh out the movie slates on its channels.
“Movies are still an important part of our schedule, and we expect as many first-run premium films on our air three years from now as we have on today,” Showtime Networks chairman and CEO Matthew Blank said. “We have literally a dozen people already trying to sell us movies.”
Blank said they include “independent companies and people operating other ways than through the studio system.”
So who might they be?
The Weinstein Co. and Summit Entertainment probably are the prime candidates to step in and fill the gap. In order to access Showtime’s channels, Weinstein has been sending many of its films through a distribution agreement with MGM. But that agreement ends this year, and Weinstein could find itself striking a new pay deal directly with Showtime.
Summit, which recently begun distributing its own films in the U.S., hasn’t struck a supply deal with any premium channel. Showtime also could find itself turning to a supplier like Meyer Shwarzstein’s Brainstorm Media, with its library full of indie titles.
Showtime’s affiliate-relations agreements, which come up for renewal within the next two years, call for studio-level product. And the other major studios already have been spoken for through long-term supply deals with Showtime’s premium network rivals HBO and Starz. Select first-run theatrical films from Weinstein, IFC and Yari Film also are available exclusively on Starz services.
New startup CBS Films, Showtime’s corporate sibling, eventually will feed movies to the pay channel, but the first film from that division, which is planning four to six modestly budgeted releases a year, isn’t expected to go into production until late 2008 or early ‘09, and so won’t probably hit theaters until sometime in 2009 and won’t arrive at Showtime until a year after that.
Negotiations with such new movie suppliers as Summit and the Weinsteins could be tough.
Showtime contends that movies don’t command the same licensing fees they once enjoyed given that they are exposed on DVD and VOD before they hit pay cable. The movie companies will likely counter that traditional pay TV arrangements are too restrictive when other opportunities like digital downloads promise growing revenue.
But if Showtime is forced to acquire first-run rights to movies on a piecemeal basis, at least one industry expert said it would have a difficult time filling its entire schedule.
Right now, Showtime Networks operates three main channels -- Showtime, the Movie Channel and Flix -- as well as eight multiplex channels. Observers are speculating that a reduced theatrical volume could lead to the dropping of some of those channels, but Showtime sources stressed that the network will have enough programming to sustain its entire distribution portfolio.
If its schedule does come up short, original movies could step in to fill the void. Showtime’s last two telefilms, “Our Fathers” and “Reefer Madness,” premiered three years ago when the pay cable network left the longform area to focus on original series. Showtime has been contemplating a return to the TV movie business -- the network’s entertainment president, Robert Greenblatt, said he was mulling the idea more than a year ago. That return could be fast-tracked with some of the money -- $300 million a year -- freed up by the expiring deals with Paramount, MGM and Lionsgate.
Still, the bulk of the money saved by not renewing the supply pacts will go toward beefing up the series slate, Blank said, noting that originals are the network’s top priority.
“We have a lot more money available for original programming now,” he said. “We’ll have the opportunity to get something on the air that before might have been a challenge.”
Is the new joint venture just elaborate brinksmanship designed to force Showtime back to the table? “It still feels like a scare tactic to me,” one industry skeptic said.
Things will not be all that easy for the new joint venture, announced by Viacom just over a week ago, which is apparently close to naming former Showtime executive Mark Greenberg as CEO. There’s an argument to be made that movies on pay cable no longer are the drivers of that biz and that the smart money is being bet on original programming. Not to mention that just getting cable carriage and attracting subscribers is hardly a cakewalk.