• by Wayne Friedman , Staff Writer, April 22, 2008

Another pay TV movie channel? Is that really Viacom's new business need? Is that what consumers need?

No. With the burgeoning number of digital TV alternatives Viacom has something else up its sleeve -- it better.

Listening to CBS's Showtime and Viacom executives explain their sides of the story, the takeaway seems that Viacom may have pushed into launching another pay TV movie channel after Showtime balked in paying too much for a new Paramount Pictures deal.

Here's one clue: Did Viacom mention any carriage deals with this announcement? Nope.

For its part, Showtime, and its longtime competitor, HBO, have been all about first-run TV shows these days. Movie libraries are there to help support original programming efforts. This move perhaps dovetails with Showtime's parent CBS, which has started its own theatrical film business -- films which will find their way onto Showtime.

With its own Paramount Pictures, as well as joint venture partners Lionsgate and MGM Studios, Viacom has positioned the move now as a pay TV channel, and as VOD for the future.  

The downside for Showtime is that its business will be affected in future years, as Paramount has been a strong studio, which ranked first in domestic theatrical market share in 2007.

The downside for Viacom is starting up a business in a more mature pay-TV cable world where digital entertainment alternatives are growing. Viacom knows the ins and outs of advertising-supported cable networks, but not so much of the transactional business that is pay TV. (In the past, Showtime was part of the old Viacom, shifted in recent years to CBS).

Like Showtime, HBO, and Starz, Viacom's new effort now needs lots of pay channels to offer modern cable customers -- say 10 channels or more. That means fighting for film deals of its own in a pay TV marketplace that is already crowded -- and uncertain.