Sep 17, 2021
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Headline, Industry News

Studios team up on pay TV channel

If it works, they’ll look like geniuses. If it doesn’t, it will amount to a big ding, at least in the short term, to the bottom lines of Paramount, Lionsgate and MGM.

The three studio partners are forging ahead with their startup pay TV channel, Epix, which is set for launch in late October. The fledgling feevee channel will put its best foot forward, bowing on its first day with “Iron Man” and other hit films from its parent studios.

The partners have billed Epix as Pay TV 2.0 — a studio-controlled venture that also will offer cable operators and other distribs one-stop-shopping for movie rights in the online, video-on-demand and mobile arenas.

That seemed like a good selling point at a time when cablers are talking a lot about squeezing more coin out of subscribers by offering new services. But Epix so far has fought an uphill battle to land carriage deals. A top exec at the nation’s largest cable operator, Comcast Corp., went public over the summer with his distinct lack of interest in any new pay TV channels.

In this environment, Epix, unveiled in April 2008, has to date just one confirmed distribution partner: Verizon’s FiOS TV service, which makes Epix available to 2.5 million households. Epix also is in advanced talks with numerous distribution partners, one of which is said to be Dish Network, which has more than 13 million sat-TV households, but for now it’s just Verizon on board.

It’s not unusual for cable startups to struggle at the outset for carriage. But the situation with Epix is drawing more scrutiny because of how important pay TV revenue is in the profitability of movies. Par, Lionsgate and MGM are not only investing in the channel, they’re forgoing pay TV coin that might otherwise be reaped from one of the established pay cablers.

Indeed, Epix was born after Par, Lionsgate and MGM separately balked in negotiations with Showtime on new output deals in late 2007 and early 2008. Showtime was looking to dramatically reduce (by as much as 50%) the license fees it paid to the three studios, which totaled about $300 million last year. HBO and Starz weren’t exactly rushing in with better offers, so the three studios decided to link arms and go it alone. Lionsgate execs had been mulling ways to take greater control of their pay TV destiny for some time.

Now, with Epix fighting for traction, the decision to go it alone is drawing scrutiny from investors who wonder if the channel’s perf in the next few years will be able to offset the loss of pay TV revenue — even at the lower fees of Showtime’s last offer. The pressure is greater on Lionsgate, which is more dependent on movies for its earnings than the diversified Viacom. (And MGM has its own set of larger debt-restructuring problems to worry about these days.)

Top brass at Viacom and Lionsgate are unwavering in their stated faith that the investment now will pay off bigtime later. Viacom CEO Philippe Dauman told investors at the Goldman Sachs media confab on Sept. 16 that far from being a big drain on the partners, he expects Epix to become “cash positive at the end of next year or early the following year.”

Mark Greenberg, the Showtime affiliate sales alum who spearheaded Epix as its president, points to the global economic tremors as a big factor in the slow pace of dealmaking for the new service. But he insists the channel will be in line with its subscriber forecasts at launch.
More than one option

  * (Person) Mark Greenberg
Best Boy Grip, Grip, Key Rigging Grip
* (Person) Mark Greenberg

Epix will allow its partners “to be closer to consumers and distributors and that will make us better able to monetize new technologies,” says Greenberg. “It will allow these studios to strategically help build these new economic models with the operators.”

But as much as Epix is focused on conquering new arenas, it needs to draw a few more old-fashioned paying customers before the pressure will let up on its partner studios.

Lionsgate CEO Jon Feltheimer says he’s confident that the decision to launch Epix will be the right move for the partners over the long term.

“We have the right idea and the right value proposition. We’re investing in a channel that should have big equity value,” he says.

Source: Variety

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Headline, Industry News

Studios team up on pay TV channel

If it works, they’ll look like geniuses. If it doesn’t, it will amount to a big ding, at least in the short term, to the bottom lines of Paramount, Lionsgate and MGM.

The three studio partners are forging ahead with their startup pay TV channel, Epix, which is set for launch in late October. The fledgling feevee channel will put its best foot forward, bowing on its first day with “Iron Man” and other hit films from its parent studios.

The partners have billed Epix as Pay TV 2.0 — a studio-controlled venture that also will offer cable operators and other distribs one-stop-shopping for movie rights in the online, video-on-demand and mobile arenas.

That seemed like a good selling point at a time when cablers are talking a lot about squeezing more coin out of subscribers by offering new services. But Epix so far has fought an uphill battle to land carriage deals. A top exec at the nation’s largest cable operator, Comcast Corp., went public over the summer with his distinct lack of interest in any new pay TV channels.

In this environment, Epix, unveiled in April 2008, has to date just one confirmed distribution partner: Verizon’s FiOS TV service, which makes Epix available to 2.5 million households. Epix also is in advanced talks with numerous distribution partners, one of which is said to be Dish Network, which has more than 13 million sat-TV households, but for now it’s just Verizon on board.

It’s not unusual for cable startups to struggle at the outset for carriage. But the situation with Epix is drawing more scrutiny because of how important pay TV revenue is in the profitability of movies. Par, Lionsgate and MGM are not only investing in the channel, they’re forgoing pay TV coin that might otherwise be reaped from one of the established pay cablers.

Indeed, Epix was born after Par, Lionsgate and MGM separately balked in negotiations with Showtime on new output deals in late 2007 and early 2008. Showtime was looking to dramatically reduce (by as much as 50%) the license fees it paid to the three studios, which totaled about $300 million last year. HBO and Starz weren’t exactly rushing in with better offers, so the three studios decided to link arms and go it alone. Lionsgate execs had been mulling ways to take greater control of their pay TV destiny for some time.

Now, with Epix fighting for traction, the decision to go it alone is drawing scrutiny from investors who wonder if the channel’s perf in the next few years will be able to offset the loss of pay TV revenue — even at the lower fees of Showtime’s last offer. The pressure is greater on Lionsgate, which is more dependent on movies for its earnings than the diversified Viacom. (And MGM has its own set of larger debt-restructuring problems to worry about these days.)

Top brass at Viacom and Lionsgate are unwavering in their stated faith that the investment now will pay off bigtime later. Viacom CEO Philippe Dauman told investors at the Goldman Sachs media confab on Sept. 16 that far from being a big drain on the partners, he expects Epix to become “cash positive at the end of next year or early the following year.”

Mark Greenberg, the Showtime affiliate sales alum who spearheaded Epix as its president, points to the global economic tremors as a big factor in the slow pace of dealmaking for the new service. But he insists the channel will be in line with its subscriber forecasts at launch.
More than one option

  * (Person) Mark Greenberg
Best Boy Grip, Grip, Key Rigging Grip
* (Person) Mark Greenberg

Epix will allow its partners “to be closer to consumers and distributors and that will make us better able to monetize new technologies,” says Greenberg. “It will allow these studios to strategically help build these new economic models with the operators.”

But as much as Epix is focused on conquering new arenas, it needs to draw a few more old-fashioned paying customers before the pressure will let up on its partner studios.

Lionsgate CEO Jon Feltheimer says he’s confident that the decision to launch Epix will be the right move for the partners over the long term.

“We have the right idea and the right value proposition. We’re investing in a channel that should have big equity value,” he says.

Source: Variety

Leave a Reply

Your email address will not be published. Required fields are marked *

Headline, Industry News

Studios team up on pay TV channel

If it works, they’ll look like geniuses. If it doesn’t, it will amount to a big ding, at least in the short term, to the bottom lines of Paramount, Lionsgate and MGM.

The three studio partners are forging ahead with their startup pay TV channel, Epix, which is set for launch in late October. The fledgling feevee channel will put its best foot forward, bowing on its first day with “Iron Man” and other hit films from its parent studios.

The partners have billed Epix as Pay TV 2.0 — a studio-controlled venture that also will offer cable operators and other distribs one-stop-shopping for movie rights in the online, video-on-demand and mobile arenas.

That seemed like a good selling point at a time when cablers are talking a lot about squeezing more coin out of subscribers by offering new services. But Epix so far has fought an uphill battle to land carriage deals. A top exec at the nation’s largest cable operator, Comcast Corp., went public over the summer with his distinct lack of interest in any new pay TV channels.

In this environment, Epix, unveiled in April 2008, has to date just one confirmed distribution partner: Verizon’s FiOS TV service, which makes Epix available to 2.5 million households. Epix also is in advanced talks with numerous distribution partners, one of which is said to be Dish Network, which has more than 13 million sat-TV households, but for now it’s just Verizon on board.

It’s not unusual for cable startups to struggle at the outset for carriage. But the situation with Epix is drawing more scrutiny because of how important pay TV revenue is in the profitability of movies. Par, Lionsgate and MGM are not only investing in the channel, they’re forgoing pay TV coin that might otherwise be reaped from one of the established pay cablers.

Indeed, Epix was born after Par, Lionsgate and MGM separately balked in negotiations with Showtime on new output deals in late 2007 and early 2008. Showtime was looking to dramatically reduce (by as much as 50%) the license fees it paid to the three studios, which totaled about $300 million last year. HBO and Starz weren’t exactly rushing in with better offers, so the three studios decided to link arms and go it alone. Lionsgate execs had been mulling ways to take greater control of their pay TV destiny for some time.

Now, with Epix fighting for traction, the decision to go it alone is drawing scrutiny from investors who wonder if the channel’s perf in the next few years will be able to offset the loss of pay TV revenue — even at the lower fees of Showtime’s last offer. The pressure is greater on Lionsgate, which is more dependent on movies for its earnings than the diversified Viacom. (And MGM has its own set of larger debt-restructuring problems to worry about these days.)

Top brass at Viacom and Lionsgate are unwavering in their stated faith that the investment now will pay off bigtime later. Viacom CEO Philippe Dauman told investors at the Goldman Sachs media confab on Sept. 16 that far from being a big drain on the partners, he expects Epix to become “cash positive at the end of next year or early the following year.”

Mark Greenberg, the Showtime affiliate sales alum who spearheaded Epix as its president, points to the global economic tremors as a big factor in the slow pace of dealmaking for the new service. But he insists the channel will be in line with its subscriber forecasts at launch.
More than one option

  * (Person) Mark Greenberg
Best Boy Grip, Grip, Key Rigging Grip
* (Person) Mark Greenberg

Epix will allow its partners “to be closer to consumers and distributors and that will make us better able to monetize new technologies,” says Greenberg. “It will allow these studios to strategically help build these new economic models with the operators.”

But as much as Epix is focused on conquering new arenas, it needs to draw a few more old-fashioned paying customers before the pressure will let up on its partner studios.

Lionsgate CEO Jon Feltheimer says he’s confident that the decision to launch Epix will be the right move for the partners over the long term.

“We have the right idea and the right value proposition. We’re investing in a channel that should have big equity value,” he says.

Source: Variety

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Your email address will not be published. Required fields are marked *

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