Showtime has just flipped on the projector in its bold experiment to schedule more original movies in a single year than any other network in history, either broadcast or cable. In the process, the web and its made-for-cable pics are defying the age-old doctrine that theatrical movies are the pop in the popcorn of pay TV.
And for the first time, Jerry Offsay, president of programming for Showtime, has revealed nuggets of audience data that give him at least some hope that his $150-million-a-year firstrun-movie strategy will not end up burying the channel in a graveyard of Nielsen also-rans.
Some competitors and Hollywood insiders are skeptical about Offsay’s strategy, suggesting that the average yearly ratings of Showtime’s original movies have fallen off since 1992, that its development program is a shambles and that the company unveils new strategies so often that the industry is regularly flummoxed by its shifts.
Offsay challenges these assertions by pointing to these positive Nielsen harbingers:
* The original hourlong episodes of the “Outer Limits” anthology series Fridays at 10 p.m. are outperforming by an average of 40% the theatrical movies that previously ran in that time period.
* When the firstrun hours of the erotic “Red Shoe Diaries” ran Mondays at 10 p.m., they beat the primetime theatrical movie average for the night by 15%.
* The rating of the first two runs of “Sandkings,” the original two-hour sci-fi thriller that served as the opening episode of “Outer Limits” during the week of March 26, ended up higher than 90% of all of the theatrical movies scheduled on Showtime in 1995. (The three exceptions were “Philadelphia,” “Sister Act 2” and “Four Weddings and a Funeral”)
Offsay says that the original movies Showtime has slotted in the last year and a half- about two a month, on average – “consistently score better in the ratings than all but the biggest box office theatrical titles.”
There are other reasons for Showtime’s firstrun strategy, chief among them the network’s unwillingness to cough up what it regards as exorbitant prices for exclusive pay TV rights to theatrical-movie packages.
Although Showtime boasts about subscriber support for its original programming, it doesn’t release actual ratings and shares of its programs because the numbers pale alongside those of HBO, which has the dominant position in the pay universe, at least in part because people in 40% of all pay households subscribe only to HBO. Among those households, HBO is the only uncensored, commercial-free network alternative to local TV stations and ad-supported cable networks.
Numbers game
By contrast, Showtime is the only premium service in just 15% of pay households. Most of the other 85% of Showtime households also subscribe to HBO, with another portion of the 85% ponying up monthly tariffs for one or two additional pay networks such as Disney Channel or Cinemax. In total subscriber count, there’s no contest between HBO, at about 20 million subscribers, and Showtime, at 9 million or so. Showtime’s not complaining, though: It has pushed up its subscriber base by about 5% since early in 1994 after suffering through four previous years of no growth.
While Showtime goes off on an original-movie binge, Dave Baldwin, VP of program planning for HBO, says HBO will continue to commission only about 12 made-fors a year so that it can treat each of them as an event, with stretched-out promotion-and-marketing campaigns that would be impossible within the once-a-week schedule Showtime has set up for its movies.
An HBO source, eager to snipe at its pay TV competitor, printed out Nielsen ratings showing that as Showtime has increased the number of original movies on its schedule each year since 1992, the average yearly rating of the these pictures has fallen off in an almost exact parallel.
In response, Showtime sources say HBO is unfairly shoving Showtime’s low-end firstrun acquisitions into the same category as its commissioned originals, thus bringing down the overall new-movie ratings. The sources add that by programming the new batch of movies in a specific weekly timeslot – Sunday night at 8 – the network is hoping to create a habit among Showtime subscribers. In previous years, there was no set night or time when original movies would premiere on the network.
The volume of movies Showtime orders will put a lot of bread on the tables of the Hollywood production community. But some of the dealmakers who negotiate with Showtime are already grumbling about skimpy budgets, which average only about half the $7 million HBO shells out for its normal made-for.
Chris Andrews, the ICM agent who represents Tom Selleck, says Selleck had a better experience shooting his forthcoming TNT original movie “Broken Trust” than the new Showtime movie he’s starring in, “Ruby Jean & Joe.” “The executives at TNT were more mature,” Andrews says,”and the shoot was easier.” He points to the tighter shooting schedule of “Ruby Jean & Joe,” which ended up forcing the kind of compromises that didn’t crop up in the higher-budgeted “Broken Trust.”
“Lower budgets mean you may not be able to get t he actors you want, and there’ll be fewer days to shoot the picture,” says Nick Wechsler, a partner with Addis-Wechsler, a company that produces movies and manages talent. Wechsler says less money will be a particular negative for the large number of genre thrillers Showtime plans to commission. The talent “will look on these pictures as merely jobs of work,” he says, contrasting them with “pieces that actors or directors feel passionate about,” and are willing to make for lower fees because the movies “push the envelope of opportunity.”
High hopes
Offsay says Showtime is definitely interested in creating “a number of high-profile movies that we’ll seek out the press and beat our chest about.”
Showtime’s firstrun movie push has landed some advocates among cable operators. “Packaging its original movies to run every Sunday night is giving them a good platform because the HUT levels are high on Sunday,” says Lynne Buening, VP of programming for Falcon Cable TV, a top-15 multiple-system cable operator.
Changing biz
Buening’s thesis is that “the pay TV business is different than it was five years ago, because the value of theatrical movies to an HBO or a Showtime has fallen off.” She cites as examples the increased visits by people to their local multiplex, the continued growth of videocassette rentals at the corner Blockbuster and the slow but steady upward curve of purchases of movies on pay-per-view.
“But I’m not going to be happy,” she says, “if too many of Showtime’s originals look like the slasher B-movie sex thrillers that USA keeps running.”
Thrillers will make up one of the four categories of the 52 movies Showtime will draw on for slotting every Sunday at 8 between July 1995 and June 1996; the others are sci-fi actioners, comedies under the “National Lampoon” label; and literary dramas, either original scenarios or adaptations of serious novels and published plays.
While USA’s made-for thrillers cost about $2.5 million to produce, Offsay says Showtime’s will be in the $3-million-to-$3.5-million range, as will its comedies and sci-fi pictures. The dramas, which will often feature higher-priced actors, directors and writers, will come in at about $4 million, as will sci-fi stories that require more elaborate special effects, he says.
Although the volume of movies represents a significant cash outlay, Offsay says Showtime has hedged its risks. For the movies in which the production entity wants to keep the worldwide homevideo and TV-syndication rights, Showtime will negotiate only for pay-cable exclusivity in the U.S. and Canada. That pay cable license fee, he says, will always be less than half of the cost of making the movie.
The more Showtime participates in the back end, the more money it will put up to help cover the production cost. For movies in which it gets all backend rights, Showtime will shell out all of the production money, but Offsay says he expects to recoup those costs – and then some – in domestic homevideo and foreign syndication.
But Larry Gershman, chairman and CEO of World Intl. Network, which focuses on distributing TV movies abroad, says turning a profit on these movies may not be so easy. He decided not to do a Showtime deal, Gershman says, because the original movies would have to gross an average of $1.5 million in foreign syndication, a number that’s almost impossible to achieve unless the movie gets a successful theatrical release beforehand.
Aiming at subscribers
Whatever the economics of foreign distribution, the key motivation for Showtime’s original-movie blueprint is to get more people to subscribe to the network in the U.S. Showtime could be damaged competitively if the movies don’t find an audience, particularly against John Malone’s Encore and Starz pay channels, which run almost exclusively on a diet of theatrical movies.
Showtime has laid down its bet, and, by this time next year, Offsay could be known either as the executive who revolutionized pay cable, or as the man responsible for the production of more B-movies in one year than anyone in the history of showbiz.
