While Networks Sputter, Pay Cable Soars

Thanks to “True Blood,” “Hung,” subscriptions, ratings rse for Showtime, HBO.

It’s not just "True Blood" that has bite. So do "Entourage," "Hung" and "Nurse Jackie."


Indeed, as ad-supported media goes up in flames, the premium cable networks are on fire. 


Somehow, they’re growing.


Showtime added 674,000 new subscribers in the first quarter of this year, at a time when the TV ad market was down double digits and the major broadcast networks were laying off staff, according to data just released by Kagan Research,


HBO added 35,000 subscribers during the same period, while Starz brought in another 380,000. All three networks were up in the fourth quarter, too.


“It’s just a very good time for us,” said Matt Blank, chairman and CEO of Showtime. “Regardless of the cost of subscription cable, consumers see staying home and watching premium channels as a cost-efficient use of their dollars.”


“People are starting to spend their money more wisely, and premium cable is a very good value for the cost,” added Dave Baldwin, executive VP of program planning for HBO. “For the price of taking the family to one movie, you can afford all of HBO.”


The numbers of the shows themselves bear this out.


Look at "True Blood," riding the crest of vampire-mania. In its second season, the HBO favorite is up 39 percent in the ratings over its first season. It’s the first real breakout hit for the network, which had been languishing a bit following the departures of “The Sopranos” and programming guru Chris Albrecht in 2007.


“True Blood” is averaging 10.8 million across platforms ranging from linear TV to DVR viewing to on on-demand services.



New series “Hung” (9.1 million viewers across all platforms for the premiere episode) is also performing well for HBO, as is veteran comedy “Entourage” (up 109 percent from last season).



Meanwhile, Showtime, which initially drew 1.4 million viewers to the June 8 premiere of Edie Falco-starrer “Nurse Jackie,” is now touting 5.7 million viewers overall for the pilot, with a trickle of DVR and on-demand precincts still reporting.



The success of the subscriber-based TV model comes at a conspicuous time in the business, with conglomerate heads, including Disney’s Bob Iger, openly discussing plans to converge all content onto online platforms that would charge consumers for access.


And business wise, newly tapped NBC boss Jeff Gaspin told TheWrap last week that "cable is "a superior model." 


Why? Because, he said, cable gets to know its audience and doesn’t try to be all things to all people.


Indeed, as media companies struggle to transition their assets and respective revenue models to broadband platforms, they’re finding that it’s the pay-cable networks that are among the most prepared.


“We think the subscription model travels well to other parts of the media world going forward,” said Blank, specifically noting how the already well-established on-demand offerings of Showtime, HBO and Starz should fit well into a broadband world. “We think that all the technology that’s emerging now will only build our business. We don’t feel threatened by it.”


As officials for Time Warner, Comcast and several other entertainment companies prepare to migrate their TV programming to their recently announced online subscription-based “TV Everywhere” platform, they have made the on-demand services from Starz and HBO key elements to their early tests.


Not being burdened by the prime directive of TV advertising — i.e. the imperative to deliver an agreed-upon amount of ratings points at a specific time — makes these pay cable channels ideal trailblazers.


For them, dispersing the audience across platforms doesn’t create problems with advertisers, and having their business extend to online/on-demand models simply means their wares are more exposed and accessible to the market.


“We’re not as obsessed with who tuned in at 10 p.m. on Monday to watch ‘Weeds,” Blank said. “We’re more obsessed about how many people watched ‘Weeds’ over the course of a week. We don’t have to worry when people watch it because we sold a spot to Ford.”


Happily for pay cable, this dynamic allows them to aggregate their audience in a way that others in the TV business can’t right now. So not only do their subscriber numbers look great, so do their ratings.


“We have the benefit of looking at our business differently because we’re not ad-supported,” Blank said. “We monetize our network by building value for our subscribers.”


And it’s working.


“It does feel good to be known as a class act (within Time Warner),” Baldwin added. “HBO has its largest subscriber numbers ever, its largest revenue and its largest earnings ever.”