Matthew Blank

February 27, 2012 World Screen

 

This interview originally appeared in the MIPCOM 2011 issue of World Screen.

A wholly owned subsidiary of CBS Corporation, Showtime Networks operates a bouquet of pay-TV linear and on-demand channels. A raft of critically acclaimed and very successful shows, from Dexter and Weeds to The Big C and The Borgias, have been attracting talent and subscribers, making Showtime a major player in the pay-TV business.

WS: What has been the strategy for your original productions and how has it evolved over the years?
BLANK: We felt strongly that the value of first-run movies in the premium pay-TV window had been diminished by the number of places where you can find those movies. Typically, a movie comes out of the theaters and we get it a year later on Showtime—you can rent it on DVD, you can watch it on VOD, you can get it on Netflix, you can get it in any number of places, particularly now that tablets are everywhere. There are more places to get movies: wired game consoles, movies on Facebook, Apple. Particularly over the past decade or so it has become very important to distinguish ourselves with programming that is exclusive to Showtime and that really brands the network. It’s been our strategy for quite a while to develop as much of that programming as possible and to elevate it in the hearts and minds of our subscribers, as well as among the press and consumers.
 
WS: What message have your original productions sent to the creative community?
BLANK: It’s had a dramatic impact on the brand and on consumers. I don’t think we’re viewed as a “me-too” brand anymore, as we may have been a decade ago. More importantly, I think the creative community views Showtime as a really important step in the process, if not the first door they knock on with a great project. All of this is a function, one, of having broken through with a couple of incredible shows in recent years and, two, the marketing and branding behind those shows that have made them an integral part of the image of Showtime.
 
WS: What content do you provide third-party platforms? Is it just clips or do you also give full episodes?
BLANK: It’s a very fluid process. For instance, there are things we do today that we wouldn’t have done a couple of years ago. There are things we did a couple of years ago that we wouldn’t do today, just because the marketplace and technology are changing so quickly. But we make clips widely available. We don’t make full episodes available in the same context, but we have licensed full episodes of our shows to Amazon, Netflix, and currently are continuing that process. We will not license an episode of one of our major series that is still on the air. In other words, Dexter is going into season six. There was a time, a year or so back, when we licensed season one and season two, but…we will no longer license any Dexter seasons until Dexter has completed its run on Showtime. After that time we would consider licensing all the seasons to various players in the marketplace. Similarly, The Tudors is out there right now, as are several older shows that were on the network. We think it’s great for people to see what Showtime has been doing over the years; it’s great for people to become fans of our shows and hopefully fans of Showtime, and I think it helps us promote the future of Showtime. That’s our current strategy. Again, it’s a very fluid marketplace, how people want to watch programming is changing, pricing is changing. We want to make sure we’re not just sticking our heads in the sand and ignoring what’s happening in the marketplace, but we’re pretty happy with our current strategy. First, we get to take advantage of a lot of the programming that we’ve owned over the years and are able to sell and realize nice revenue with, and second, we’re able to protect the assets that people are buying Showtime for today.
 
WS: Some companies see Netflix as a disruptor of the normal business model. You instead have found a good relationship with them.
BLANK: We have a great relationship with Netflix. They have been an important customer of Showtime and CBS Corporation for a lot of programming—again, not current programming, but programming that is off the air. We think that they are really smart guys who have done a great job of developing the Internet-delivered marketplace. We’re also cautious. We don’t want to make deals with Netflix or others—this isn’t just a Netflix issue—that would diminish the value of Showtime. We want to make sure that Netflix and others are vehicles to sell our product but don’t become real competitors. That’s something we don’t want to see happen, but right now we think they’ve been great customers.
 
WS: Is Showtime On Demand helping to boost viewing and subscribers?
BLANK: We always believed that premium services should be the first players to provide you with new ways to consume product, and that’s why Showtime was among the very first to be in the on-demand business. When we launched on-demand about a dozen years ago, what was the first thing we saw from the very first research? Well, it wasn’t really a surprise: viewership—the average length of tune-in to our original programming—went up in excess of 20 percent. Viewers’ expressed likelihood to continue subscribing to Showtime went up. Most importantly, and this has a good deal to do with how we’ve been able to build and strengthen the brand, on-demand use helps us make sure we get the attribution for all the great shows that are on Showtime.
 
The worst thing is if somebody says, “Oh, I just love Dexter. I love seeing Dexter on HBO.” That doesn’t happen that much anymore, because so many people use Showtime On Demand and, by definition, have to go to the menu, find Dexter and the episodes they want to watch. There’s an increased level of connectivity between the network and the users when they are in the consumer interface for on-demand. There are all sorts of benefits. A great amount of the viewing of our shows now happens either on DVRs or on-demand. For example, in a given week, if you look at the viewing of Weeds, as much as 65 percent is taking place off the linear Showtime service. So that’s very, very important.
 
We also think that within the universe of premium TV, we have a number of strategic advantages over other networks since we are not advertising supported. If you’re a fan of The Borgias, at the end of the day we love to see a nice weekly rating on Sunday nights but we don’t get paid for that now. We don’t have to talk to the ad agency the next morning about make-goods if we didn’t make a number, we don’t have to consider how we can charge advertisers more if we did better than we thought we would do on Sunday night. For us it’s all about the cumulative viewing and the opportunity to see Showtime in different ways, so that by the time this season of The Borgias is over, if you are a fan, you have had plenty of opportunities to explore all those episodes and you end up being a happy puppy. So on-demand is a really important part of the mix. The main premium networks were the first ones to offer on-demand services and we’ve contributed to the way people want to use tele­vision today—we have fueled the expectation that they have a lot of different ways of accessing the shows that they want to see.
 
WS: There’s a lot of talk of cord-cutting. How much of a threat is it?
BLANK: There is a tremendous amount of talk about cord-cutting. We haven’t really seen it. We look at our distributors’ monthly, quarterly, annual results, we see a lot of subscriber movement between cable and satellite and telephone providers, but we don’t see a lot of evidence of cord-cutting. I’m not saying it’s not happening in some areas but we don’t see a lot of evidence of it and we certainly see no evidence of it in terms of Showtime’s growth. We’ve just continued to have terrific growth for the past several years. We’ve come through, or maybe we haven’t come through, one of the worst economies in the history of the United States. Are we to believe that the foreclosure rates wouldn’t have any impact on [cable and satellite operators] who are dependent on somebody being in a home and paying a bill every month? There are a lot of things happening because of the economy that probably mask the true act of what may be happening in the marketplace. What we look at are emerging customers—how will younger people who have grown up on the iPad and iPhone and Netflix and Hulu—in addition to having cable and satellite in their parents’ homes—choose to consume television in the future and how can we be certain that we’ll be providing them with the types of options they want? That’s really the challenge for us in the future. We think we have a tremendous opportunity because the subscription model travels very nicely, so there should be a relatively seamless migration to new technologies when the time is right. We think that our current distributors, many of whom offer broadband service, will be the beneficiaries in a lot of these new technologies because everybody needs an Internet connection to effectively access the product. But I think it’s too early to say that cord-cutting is a dominant trend in the business. And regardless of where the technology goes, we think that we have the programming that people want and we have a business model that will travel very nicely across technologies and serve all current and future users.