Showtime Locks Up the Lion

Cable World, May 1, 2000 by Mike Reynolds

Showtime Networks has pounced on a lion-sized deal with Metro-Goldwyn-Mayer.

The agreement, including future theatrical output, cyberspace windows, library films and series production, is valued at an estimated $1.4 billion and runs through 2008. The pact bolsters and supercedes Showtime's 10-year relationship with MGM, effectively keeping interested parties HBO and Starz Encore Media Group at bay.

Under the extended contract, Showtime will have exclusive pay-TV rights for up to 270 films. The deal includes Autumn in New York and Silence of the Lambs sequel, Hannibal, as well as such recent box-office hits as The World is Not Enough, The Thomas Crown Affair and current David Duchovny vehicle Return to Me. The agreement also calls for Showtime to license up to 1,200 library titles over the next six years.

"We're very excited about this deal," said Matt Duda, EVP-program acquisitions and planning at Showtime. "It gives us theatrical product from two studios for many years to come and thereby allows us to concentrate more time and resources on original programming that can only be viewed on Showtime networks." Showtime also licenses Paramount Pictures product, a sister company within parent Viacom.

The deal with Showtime doesn't prohibit MGM from its continued pursuit of launching its own branded cable channel. Duda said the deal is structured in a way that library product wouldn't overlap. "Over six to eight years, there are ways to ensure films might be available to one party in 2001 and another in 2005," he noted.

Unlike Starz Encore's recent $1.6 billion, six-year agreement with Sony Pictures Entertainment, Showtime's pact with MGM places the network in control of Internet window rights. Under terms of the contract, SPE -- as was the case with the deal Disney signed with Starz Encore last year -- retains the rights to deliver the films on pay-per-view or a downloading basis over the Internet, simultaneous to the windows that are available on the premium service. Starz Encore also can offer the films as part of its subscription VOD package or downloading via the Internet.

"It's important for us to have theatricals that will only be available on Showtime ... Not on the pay-per-view, not on the Internet," said Duda. "Exclusivity rights in all media are one of our bigger negotiating points."

The agreement with MGM also allows Showtime to offer films on a SVOD or on-command basis during its pay window. Duda said Showtime is exploring several models and will be rolling out various tests to gauge subscriber interest.

As to series production, MGM and Showtime have a long-standing relationship that has spawned Poltergeist and Outer Limits. The contract also calls for a fifth season pickup of Stargate SG-1, meaning another 22 episodes will air on Showtime.

The deal covers the creation and production of three new original series to bow in 2003, 2005 and 2007, respectively. Duda said that while Showtime/MGM have enjoyed "good results with one-hour science fiction dramas over the years, genre preferences can change over time."

He said creative input could come from either party or a combination of the two in developing these series.

The pact doesn't provide for MGM to produce any telefilms for Showtime, which has previously aired such titles as 12 Angry Men and Inherit the Wind. Dirty Pictures, which debuts May 27, comes from the MGM camp.

Showtime has become the first premium channel to ink a deal with ReplayTV Service to become available through its ReplayZone feature that works as a shortcut for viewers to find their favorite programming. The real time search engine enables watchers, at the click of the remote, to select and record shows without having to identify time and air dates.