May 24, 2024

With ‘Homeland,’ Showtime Makes Gains on HBO

At the Golden Globes, “Homeland” won the best drama award, helping Showtime match HBO in the number of awards won (three) and setting up what could become a more competitive battle between the rivals. As Showtime edges closer to its competitor’s subscriber numbers, though, HBO is ready to counter with a host of prominent projects over the next six months.

Awards mean a lot to pay-cable channels. “They are particularly important because you are trying to create a sense of value that’s worth subscribing to on a monthly basis,” said David Nevins, Showtime’s president for entertainment. He added, “That best-series win is a breakthrough moment that says cutting-edge stuff is being done here.”

Offering compelling series is the main way premium channels keep the subscriber cash flowing. “We don’t think it’s an accident that five years ago we were at 13 million subs, and now we’re pushing 22 million,” Mr. Nevins said.

Showtime has improved its subscriber base to 21.3 million from 13.8 million in 2005, according to the media analyst firm SNL Kagan. Over the same period, HBO has held relatively steady at 28 million to 29 million.

The leveling off of HBO’s growth, its executives conceded, can be traced in part to a fallow period in its series development about four years ago, when its entertainment management was going through an upheaval as Chris Albrecht was replaced by Michael Lombardo, the president for programming at HBO, and Richard Plepler, the co-president of HBO.

“We had precious little in the coffers,” Mr. Plepler said.

Mr. Lombardo added, “We were getting a little spooked by our own success. ‘Sopranos’ and ‘Sex and the City’ were so big, what happened was an inertia to try new things.”

HBO famously passed on “Mad Men” — which has collected a trove of awards for AMC — and it took time and “a full-court press,” as Mr. Plepler put it, to bring the biggest names in Hollywood back to HBO.

But HBO never lost the advantages it has always enjoyed, money and brand identity. And those factors have long drawn many stars to HBO.

The talent agency WME represents big series at both pay-cable networks, including “Homeland” at Showtime and “Boardwalk Empire” at HBO. Ari Emanuel, the head of the agency, said Showtime was surely becoming more relevant.

“ ‘Homeland’ has helped them,” he said. But he added, “What we know is there are two iconic brands in cable: ESPN and HBO.”

One reason, he said, is that “HBO has huge advantages” in areas like financial resources, technological innovation and brand recognition. While Leslie Moonves, the chairman of Showtime’s parent, CBS, is “an executive you never bet against,” Mr. Emanuel said, “Les doesn’t have the economic firepower of HBO.”

In recent years, HBO has earned about a quarter of the total annual profits for its parent, Time Warner, generating slightly more than $1 billion annually. Showtime is growing, but remains considerably behind. A Morgan Stanley report on CBS estimated that the cable channel would earn $692 million in 2011.

The channels earn significant revenue from subscriber fees: usually about $16 a month for each subscriber. HBO also owns virtually all of its programming while Showtime owns about 50 percent. (“Homeland” is owned by the Fox studio.) That means HBO makes more in ancillary sales — to international outlets, for example. And HBO has been ahead in distribution expansion, most recently with the mobile app GO, now available to more than five million users.

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