Showtime has engineered a carriage deal with Paul Allen’s Charter Communications that looks like something close to a giveaway.
What Showtime has agreed to do is bundle the network and all of its various channels and services into an umbrella movie package for slotting on a low-priced digital tier.
“Our goal is to put good movies and original content into as many households as possible,” said Kip Simonson, senior VP of sales and marketing for Charter.
The way the deal works, a digital subscriber to Charter would pay only $4 a month to get Showtime, its sibling the Movie Channel (TMC), all of the multiplexes of Showtime and TMC, plus the high-def and on-demand services provided by Showtime.
Charter subscribers would have to rent a digital box to receive the $4 package, but the total monthly fee would come to only $50. For that price, Simonson said, subscribers would receive a batch of thematic movie channels (westerns, comedies, romances, etc.) from John Malone’s Encore in addition to the Showtime package.
Simonson said that Showtime only appears to be settling for what looks like a surprisingly low rate, considering that it’ll collect only about half of the monthly $4 fee, depending on how many Charter subs end up buying the package. By contrast, he said, Charter slaps a monthly fee of $13 on subscribers to a similar HBO/Cinemax offering of both networks and all of their multiplex channels, plus high-def and on- demand.
“The plus for Showtime,” Simonson said, “is that it will pick up a much faster deployment of its on-demand service.”
Even more significant, according to Simonson, is that “Showtime will experience a dramatic reduction in churn.” Churn is the industry term for the number of people who cancel a pay TV network, which averages out to a staggering 60% or more a year. Any cutback in that figure will help to stabilize Showtime’s financial base.
For Charter, the hope is that its subscribers become so comfortable calling up free on-demand movies and series like “The L Word” and “Queer As Folk” that they’ll start buying pay-per-view movies at $3.99 a pop in the on-demand window.