Showtime took a potentially big step toward boosting its subscriber base by signing the eighth-biggest multi-system cable operator, Cablevision Systems Inc., to its TOPS plan.
“This is a major coup for us because Cablevision is an excellent packager of premium services,” says Jack Heim, Showtime’s exec v.p., sales, business development and affiliate marketing.
Peter Low, Cablevision System’s v. p., programming, says, “This deal makes sense because it allows us more options and more flexibility” in positioning Showtime and its sister premium service, the Movie Channel, in various paycable tiers.
The goal of TOPS (Total Optimization Of Premium Services) is no less than to completely overhaul the way cable operators structure their Showtime payments.
A source familiar with the deal uses the following example: A cable system with 1,500 Showtime subscribers who pay $8 a month retail would right now fork over half of those revenues ($4 a sub, or $6,000 a month) to the pay network.
But under the new setup, instead of using the Showtime subscriber figure of 1,500 on which to compute the payments, the cable system would take its total subscriber base – in this example, 10,000 subs – and divide it into the monthly revenue figure of $6,000 to come up with a subscriber fee of 60 cents a month.
The point of this restructuring, in Heim’s analysis, is that “as the cable operator adds more new Showtime subscribers, he gets drastically reduced prices from us.” And the best way for the cable operator to harvest new paycable subscribers is to lower the prices.