It’s no secret that the cable television industry is going through a period of radical change. With consumers increasingly choosing different ways to get their entertainment, from video on demand services to online streaming to DVD purchases, media companies are throwing all kinds of innovative new distribution strategies at the wall and seeing what sticks. For studios Paramount, MGM, and Lionsgate, this means launching their own pay TV network to compete with the likes of HBO and Showtime.
This industry greeted this announcement with a noticeable lack of enthusiasm, if not outright skepticism that Paramount, MGM, and Lionsgate have any intention of launching the venture at all. It came on the heels of failed negotiations with Showtime to strike a new movie supply deal with the premium network. It has become extremely expensive for pay TV networks to get the exclusive rights to run movies, and they’ve been increasingly losing money on the deals because of the growing number of competing distribution avenues. As a result, Showtime demanded the studios lower their price (last year it paid $320 million to Paramount, MGM, and Lionsgate), the studios balked, and they bargained themselves into a stalemate.
In a surprise move, the studios said, “Well forget you, Showtime, we’re gonna launch our own channel then.” The whole thing reeks of the business equivalent of a child sticking out his tongue at someone who made him mad. Why, you ask? Because the whole plan is very sparse on details and seems hastily executed. Just look at the press release and notice the clues: It came out on a Sunday when it could fly under the media radar, the new channel has no name and is a year and a half away from launch, and it has no cable or satellite distribution partners lined up — which is unheard of when you launch this kind of endeavor; there’s always some sort of initial agreements in place before you go public.
Rightly, many analysts have wondered if the studios are merely using the announcement as leverage against Showtime. It’s somewhat of a cynical view that they would engage in such an elaborate game of chicken, but anything’s possible. I doubt it will matter though since Showtime, much like HBO, has long since expanded beyond the traditional pay TV model and become a hub of critically praised original series like Weeds, Dexter, and The L Word. In fact, given that HBO is in a bit of a creative rut now that they no longer have The Sopranos, Sex and the City, or The Wire, Showtime’s more than comfortable with their original programming and will likely respond with, “Whatever, dudes. Don’t let the door hit your you-know-what on the way out.”
Given the difficulty of launching any sort of new cable network, much less one that relies heavily on running movies from the libraries of three studios, will not be easy. Paramount, MGM, and Lionsgate tried to build enthusiasm by saying the channel will embrace video on demand capabilities and develop their own original series, but again, extreme skepticism is warranted. Show me, don’t tell me, guys.
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