Showtime has defied cable TV gravity during the past decade by posting double-digit annual growth in earnings and revenue. CBS Corp.’s cluster of Showtime channels are on track to deliver nearly $1 billion in earnings this year.
If that weren’t enough to brag about, Showtime is home to what CBS Corp. chief Leslie Moonves calls his “favorite show on TV anywhere”: “Ray Donovan.” Moonves notes that after years of Showtime being an also-ran to HBO, the two networks are now “spoken of in the same sentence as creative equals.”
The strength of its original-series programming turned the tide for Showtime. The turnaround started a decade ago under former entertainment president Bob Greenblatt, and has expanded on David Nevins’ watch.
“David is a showman,” Moonves says. “He’s someone who’s great with the creative community, great in working with scripts, and he also has an overall sense of what Showtime should be. He’s a creative executive who has great administrative and business chops at the same time. It’s rare to find that in one person.”
Showtime’s growing importance to CBS’ bottom line can be credited to the success of its high-end original series in pulling in new subscribers. The focus on such shows came just in time for CBS to capitalize on the boom in demand for programming from digital and international outlets. In 2013, the CBS Cable unit (which Showtime dominates) accounted for 14% of CBS Corp.’s total revenue, or about $2.1 billion, and 27% of consolidated operating income, or about $877 million.
Showtime’s 10-year growth curve is undeniably impressive. The pay cabler was seen as something of a backwater in mid-2005, when Sumner Redstone first carved up Viacom into separate nation-states: one run by Moonves, the other by Tom Freston. Showtime was well in the shadow of HBO at the time, with earnings of about $200 million a year and just over 13 million subscribers.
Although Freston took the MTV Networks cable group in the divorce, Showtime went with Moonves to the CBS side. At that point, Moonves made the pay cable net a priority. The programming strategy shifted to regular series rather than a broad slate of telepics as it had focused on in the past. When “Weeds” and “Dexter” took root in 2005 and 2006, respectively, a different approach began to take hold.
“We decided to change the whole mindset and focus on how to grow,” Moonves says. “We knew needed to get more original series on the air, and have more diverse programming. We weren’t content to be Avis to HBO’s Hertz.”
Armed with a strong slate of buzzy shows, Showtime’s growth prospects for the next 10 years look rosy, as the subscription TV biz inevitably capitalizes on the influx of over-the-top services looking to compete with cable operators, satcasters and telco services. Sony Corp. is in the midst of signing up programming partners for a nascent OTT offering. Verizon and others are said to be circling the same ground. HBO has planted its flag, announcing on Oct. 15 plans to launch an over-the-top service next year.
“There’s no one who isn’t exploring the possibilities from a technology point of view and an execution point of view,” Moonves says. And he notes that the entry of new distribution players is always a boon to well-endowed content providers.
“This industry has done well by delivering our content in all sorts of different ways,” Moonves says. “It’s an exciting world right now for a company like Showtime.”