ViacomCBS Stays All In on Showtime
September 23 2020 - 5:59AM
Dow Jones News
By Joe Flint
When ViacomCBS Inc. unveiled plans last week to launch
Paramount+, a supersize streaming service featuring content from
across the media company's myriad units, something was missing:
Showtime.
The omission set off a round of speculation about the fate of
the premium network, best known for well-regarded dramas such as
"Homeland" and "Ray Donovan." Some observers viewed the move as a
lack of confidence in a service that has toiled in the shadow of
much-bigger rival HBO and competes in a crowded environment that
includes rivals Netflix, Hulu and Amazon Prime Video.
"We have urged them to sell this asset to someone else," said
Michael Nathanson, media analyst and founding partner at
MoffettNathanson.
Don't bet on that, says ViacomCBS Chief Executive Bob Bakish,
who holds that the network, with its mix of original shows, movies
and boxing, is strong enough to stand on its own.
"Showtime is not thought of as a leader in premium, but it is
leading this year," Mr. Bakish said in an interview. Showtime's
direct-to-consumer streaming offering, also called Showtime, gained
more subscribers in the first six months of this year than it had
in the previous three years, he said.
ViacomCBS doesn't break out subscribers for Showtime -- which is
available as an add-on channel on cable or through the streaming
platform -- but people familiar with the operation say it has 27
million subscribers, seven million of whom are coming through the
Showtime streaming service. Credit Suisse expects that number to
top nine million next year.
Those numbers still pale in comparison to HBO and Netflix, which
respectively have 36 million and 60 million subscribers in the U.S.
The size of the gap has prompted some media analysts to question
Showtime's long-term value to ViacomCBS.
Mr. Nathanson said Showtime "is on a very modest revenue growth
trajectory," adding that he doubts the network can spend at a level
to compete with its rivals.
"I think we're a little bit underestimated," Showtime CEO David
Nevins said in an interview.
Mr. Bakish said some of Showtime's streaming growth can be
attributed to people staying at home during the coronavirus
pandemic and buying additional content, but that ratings for all
versions of the service have been solid.
Showtime got strong performances from the final seasons of the
spy drama "Homeland" and the Hollywood detective serial "Ray
Donovan." Newer dramas including the high-finance soap "Billions"
and urban drama "The Chi" have also been solid. The network also
has unscripted fare, such as the late-night talk show "Desus &
Mero."
Showtime has also benefited from the surge in new streaming
services that might have overwhelmed and confused consumers, Mr.
Nevins said. "Our competition becomes a little diluted in their
brands," he said, alluding to the fact that HBO was briefly
available on three separately branded streaming platforms: HBO Now,
HBO Go and HBO Max.
Showtime's streaming growth comes at a critical time for
ViacomCBS. Revenue was down 22% in the company's most recent
quarter, in large part because advertisers are cutting spending
during the pandemic. Theatrical revenue was nonexistent for the
same reason. Showtime's streaming subscribers are more profitable
to ViacomCBS than cable and satellite subscribers because more of
the revenue goes directly to the network.
Mr. Nevins said Showtime's willingness to form partnerships with
all distributors gives it another edge. New streaming service HBO
Max hasn't been able to reach agreements to be distributed via Roku
and Amazon's streaming devices, and NBCUniversal's Peacock doesn't
have a deal with Amazon. Showtime is available everywhere.
"We're a pure-play content company," Mr. Nevins said. "We have a
flexibility other people don't have that gives us a competitive
advantage." Unlike HBO Max, which is owned by AT&T Inc., and
Peacock, a property of cable operator Comcast Corp., "we have no
ulterior motives to support a distribution system" that complicates
relationships with third parties, he said.
ViacomCBS was also the first programmer to cut a deal with Apple
Inc.'s new Apple TV+ streaming service, which is now selling access
to Showtime as part of its own content offering.
Showtime has been acquiring more documentaries and nonfiction
programs, both because of their popularity and to keep fresh
content available as the coronavirus slows the production of
scripted fare.
Although some veteran Showtime programs such as "Homeland" and
"Ray Donovan" ended recently, "Billions" and "The Chi" are still in
their prime. The hit "Shameless" -- about an extremely
dysfunctional family -- will be back later this fall and a new
limited series about the relationship between President Trump and
former Federal Bureau of Investigation Director James Comey --
starring Jeff Daniels as Mr. Comey -- is scheduled to make its
debut next week. On top of that, Bryan Cranston of "Breaking Bad"
fame is starring in a legal thriller called "Your Honor" set to
premiere later this year.
Write to Joe Flint at joe.flint@wsj.com
(END) Dow Jones Newswires
September 23, 2020 05:44 ET (09:44 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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