Hooray for Hollywood

Despite originals' prestige, movies are cabler's bread & butter

At HBO, original series like “Sex and the City” and features such as “The Gathering Storm” may be the lodestone for critical raves and Emmy nominations by the bushel.

But showing movies of fairly recent vintage, the raison d’etre for the premium pay service when it was launched in 1972, and which constituted virtually all of its programming for many years, still accounts for 60% of the hours transmitted to subscribers each month.

And that’s only on HBO’s flagship channel. There are seven HBO channels available to cable and satellite subscribers (plus a new high-definition service) and eight channels of Cinemax, its sister premium service, where it’s all movies all the time.

“If we just had the series — without the movies — we wouldn’t have nearly as good a business as we have,” says David Baldwin, exec veep for program planning for HBO and Cinemax.

Movies, he declares, are still a primary driver for luring new subscribers and a primary reason for retaining the service.

Each month, Baldwin estimates, HBO broadcasts 90 to 100 different movies and the same goes for Cinemax. That means that over the course of a year, some 2,000 movie titles are shown to subscribers who get both services.

A sign of the continuing importance of theatrical movies for HBO? It has exclusive rights to about half of the annual output of Hollywood’s big studios. Those terms of exclusivity extend for periods of up to 10 years, which keeps those films off competing premium channels. The other 50% of what Hollywood produces annually is mainly split between its competitors Showtime, owned by Viacom, and Liberty Communications’ Starz service.

Studio alliances

For starters, HBO has a long-term arrangement with Warner Bros. — both are owned by AOL Time Warner. It has deals with Fox, DreamWorks and Sony to get all the pictures — hits and flops — they distrib each year.

Universal presently provides half of its output to HBO and the other half to Starz, an arrangement that is set to change for movies made beginning in 2005, when HBO will get all of U’s features.

A sign there’s still some competition for product, Sony will shift its pact from HBO to Starz for 2005 output and beyond. New Line, now with Starz, will move to HBO. It’s also owned by AOL.

Starz also has an exclusive longterm deal from Disney’s movie divisions (Touchstone, Miramax and Walt Disney Pictures). Showtime’s key movie outputs are with Paramount, its sister company, and MGM. HBO refuses to disclose multiyear financial details with individual studios. All include a set number of exhibitions allowed as part of the license.

Explains Baldwin: “If we license something for 15 months, we preplot which of our channels we’re going to use it on, and in which month, and approximately the numbers of plays to take, so we don’t exceed the exhibitions, nor do we want to underplay it and fail to amortize our cost for the movie.”

There’s also often an added kicker based on how each film performed at the box office. On that basis, the biggest premium recently went to Sony for “Spider-Man,” the 2002 box office champ, which premiered in June on HBO with 19 airings scattered over its channels.

This month, “Spider-Man” begins its initial run on Cinemax. That will then be it for its first window. A film will be rested and then typically can come back three or four months to a year later. Later windows can be replays of 10- to 20-year-old movies that get touted as classics.

First-run theatricals usually get to HBO from 10 months to a year after they have played out in theaters, but, at HBO’s insistence, no more than six months after their release for purchase or rental on video and DVD.

While HBO and Cinemax are offered as distinct and separate premium services — with the number of separate multiplex channels that subscribers can get dependent on their cable or satellite ops — the two are programmed on a complementary basis.

“The HBO and Cinemax people both work for me and they absolutely pay attention to each other,” asserts Baldwin, who has been responsible for overseeing and programming both services since April 2002.

Saturday night serves as the linchpin for what’s in effect a double-feature strategy. HBO in its “Saturday night guarantee” premieres a different movie at 8 p.m. 52 Saturdays a year. Cinemax at 10 p.m. piggybacks, with its own unique Saturday premiere. Recent double bills include “Minority Report” on HBO and “Unfaithful” on Cinemax in July and “Men in Black II” on HBO and “Pluto Nash” on Cinemax this month. Popular films often do double duty. “Spider-Man” was HBO’s Saturday premiere in June and is Cinemax’s this month.

The strategy has paid off. According to Baldwin, who started at HBO as a ratings researcher in 1978, within the 30-million HBO sub universe, the Saturday night guarantee has for 12 years ranked first on an annual basis in terms of ratings and deliverable viewers — 3.4 million a week on average — among all shows in that timeslot.

That includes shows on the networks and cable. An impressive achievement, though the claims based on a proprietary survey done for HBO could not be verified independently. The Cinemax main channel, with a smaller group of 12-million subs, has only had its Saturday night premiere movie for three months, so measurements are premature.

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The early days of HBO when subscribers complained that every time they tuned in they would encounter “Shrimp on the Barbie” or some such trifle playing for the umpteenth time are long over.

“We attempt as much as possible to provide choice, not just on HBO and Cinemax but all the way down the line for all 15 channels,” declares Baldwin. “We groom each of them so that a consumer sitting down at any time has a plethora of choices to suit whatever mood they might be in.”

Besides two distinct multiplex networks — one devoted to younger viewers and the other a Spanish-language version of the main channel — HBO programs two of its services to attract more specialized demographics. Signature, which was launched as HBO3 in 1991, is designed to attract boomer professionals who don’t watch a lot of TV.

“When they do tune in they want to be assured what they’re choosing is time well spent,” declares the premium- channel honcho. In practice, that translates into HBO’s version of the Independent Film Channel. Recent offerings include “Desert Saints,” a twisty modern noir starring Kiefer Sutherland, and “Kissing Jessica Stein,” the arthouse title about Sapphic stirrings.

HBO Zone meanwhile targets a younger, more urban audience, programming movies like “Eight Legged Freaks,” a satire on cheesy ’50s monster movies, and the hard-action “Judgment Day.”

“For broad mass entertainment vehicles, there’s nothing more powerful on the planet than a big Hollywood feature,” Baldwin says.