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Cinemax Breaks Out with Blockbuster Premieres

When most viewers and many cable operators think of Home Box Office, images of The Sopranos, Sex and the City
and World Championship Boxing come to mind.

Cinemax, on the other hand, inspires thoughts of second-run Hollywood titles that began their pay TV life on HBO, Cinemax's bigger sibling in the Time Warner Entertainment family.

To try and erase that perception, starting this summer Cinemax will attempt to establish a new identity: as the top movie pay-TV service in cable, firmly targeting the coveted 18-to-34 demographic.

The pay TV programmer will seek to boost its profile by premiering some of the biggest pay-TV titles — including X-Men
and Charlie's Angels — along with many less prominent theatricals.

Cinemax executives know their network suffers from an identity crisis. Though it finishes far behind sibling HBO in subscriber count, it leads key rivals such as Viacom Inc.'s Showtime and Starz Encore Group LLC's Starz!, according to Paul Kagan Associates figures. Cinemax currently has nearly 12 million subscribers, compared with 25 million for HBO, 12.8 million for Showtime and 11.4 million for Starz!.

Starz Encore's Encore pay service has 15 million subscribers, but much of that distribution is gained through deep rate discounts, Kagan noted.

Cinemax also claims that it provides many more movies with its pay-TV starts — 614 titles during the first nine months of 2000, compared with 270 for Starz! and 154 for Showtime.

In an effort to raise Cinemax's profile, the premieres of more of the top movies that would typically bow on HBO will shift to Cinemax.

Beginning in July, Cinemax will offer the first premium run of such $100 million theatricals as X-Men, Road Trip, Hollow Man
and Charlie's Angels.

"These are big, major releases that, taken singularly or as a group, would put Cinemax on the map," said HBO and Cinemax senior vice president of program planning Dave Baldwin.

Cinemax benefits from its ability to draw from titles from most of the top studios. It and HBO have long-term deals with DreamWorks SKG, Warner Bros., 20th Century Fox and Universal Pictures (starting in 2003).

Nonetheless, rather than beefing up its movie slate, many operators hoped Cinemax would come up with a better economic package as relates to its licensing fees.

Some operators hoped HBO would take the route of Showtime/The Movie Channel and package both HBO and Cinemax under one rate-card fee, instead of charging separately for each. Currently, Cinemax costs operators between $3 and $4 per subscriber, compared with $6 to $7 for HBO.

"I think [Cinemax] definitely has an audience and skews young adult, but compared with all of the other plex screens out there, it doesn't have the value related to its licensing fee," said one executive with a top-10 MSO. "I would have hoped it would have gone in the other direction and rolled it up under one licensing fee."

Baldwin said the rate card would remain intact for the foreseeable future.

"We're not aggressively changing the rate card. We're just trying to push the brand," he said.

Millenium Cable senior vice president of marketing and programming Peter Smith said an improved Cinemax would help increase the value of digital cable — if it doesn't dilute HBO's value.

"If they want to improve the consumer's value perception we would welcome any incremental investment in Cinemax," Smith said. "What we don't want to do is weaken the core product and end up with two OK services."

Baldwin said Cinemax's improvement would not come at the expense of HBO. "We're not taking much from the HBO subscriber — subscribers will still get Band of Brothers, new episodes of Sex and the City
and a new series,
Six Feet Under," Baldwin said. "It's just a matter of optimizing this wonderful inventory we have to play with."

To further extend its brand, the network will launch four original movies under the "Creature Features" moniker, Baldwin said. The movies, remakes of classic 1950s sci-fi films, is the first step of the network's goal to acquire original movie features.

With last week's launch of four new digital channels — Wmax, @Max, 5StarMax and OuterMax, part of the HBO/Max digital pak — Cinemax has a total of eight channels with which to build its brand.