Theatrical Movies Drive Basic Cable Expenditures, Viewing

26 Jun, 2012 By: Erik Gruenwedel

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Basic cable networks are spending millions of dollars licensing movies — even before they debut at the theater — in an effort to attract and retain subscribers and advertisers, according to a new report by IHS Screen Digest.

The El Segundo, Calif.-based research firm found that some cable networks are paying eight-figure fees for titles without a proven box office. Movies accounted for 13.5% of total TV airtime among the 79 basic cable networks included in the report. The expenditures are considered appropriate since significant portions of the consuming public consider their pay-TV subscription to be of greater value than other forms of entertainment, according to IHS.

AMC Networks, News Corp.’s FX and Fox Movie Channel, and Time Warner’s TNT devoted the largest amount of time to airing movies by basic cable channels. For instance, movies on AMC accounted for 3% of all airtime on the 79 largest U.S. cable networks. An estimated 2% of the airtime was accounted for by AMC’s other content, such as original programming like its popular series “Mad Men.”

Of the movies shown on TV in 2011, 53% could be considered “fairly recent,” with theatrical debuts that came after Jan. 1, 2000. Another 20% appeared on the big screen between 1990 and 2000. Dramas, comedies and romantic comedies were the biggest categories.

Indeed, the movie Titanic (1997) took up the most airtime of any film in 2011 leading up to the 100th anniversary of the disaster and the theatrical re-release in 3D of the original James Cameron box office hit. The film totaled more than 178 hours, or 10,680 minutes, through 55 broadcasts aired on five different channel groups in 2011. In addition, the top movie by number of times played was the 1995 film Bad Boys, starring Will Smith and Martin Lawrence, which played a total of 75 times on eight different channels, ahead of such films as Rock Star, Legally Blonde and Knocked Up.

In the case of FX, the network has become a key component to News Corp.’s cable division, accounting for 20% of News Corp.’s total net revenue in 2011. Momentum for FX continues with the station’s acquisition of movie rights to 28 of the top 50 films in 2011, including blockbusters Transformers: Dark of the Moon, The Hangover Part II, Thor and Captain America.

For the USA network, movies helped the network top $1.5 billion in net revenue last year, even though films still account for a lower portion of its network airtime (19%) compared to FX or TBS.

“The large expenditures undertaken by media conglomerates to license movies to their basic cable networks are justifiable, even if single-title prices regularly top $20 million for a first-run cable window,” said Erik Brannon, analyst for U.S. cable networks at IHS. “A good example is the movie Iron Man, which was snapped up by FX Network for $22 million, prior to the conclusion of its theatrical run. Moreover, the number of movies aired on a cable network can be a formidable weapon in a network’s goal to increase audience size, which in turn can be leveraged to entice more advertisers.”
 

 

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