BusinessWeek‘s Ron Grover has a nice scoop: When DreamWorks moved to Disney for distribution, it fell under Disney pay TV deal with Starz through 2012. But Starz balked. You see pay channels like Starz get a piece of the annual $10-$12 a month that a cable operator collects from customers who get the channel. So let’s say that Starz has 18 million subscribers, the last number which owner Liberty Media reported to the SEC. If it gets $5 a month from each subscriber, it generates revenues of $90 million a month or about $1.1 billion a year. The problem comes in the payout to Disney, specifically the number of films Disney releases and, just as importantly, how those films do at the box office. So the addition of DreamWorks, if it’s successfull, would be too costly. The result is that Starz pressured Disney to force DreamWorks to find another pay TV home.
That Spielberg et al have now landed at Showtime is great news for CBS Inc and Les Moonves, who needs to strengthen Showtime’s offerings after losing its deal with Paramount, Lionsgate and MGM to the new Epix now rolling out. As Showtime starts lining up for its next round of negotiations over fees with cable and satellite operators, Spielberg is one of the headline acts. Also Spielberg is executive producer for the show United States of Tara on Showtime, as well as producing a show on the behind-the-scenes making of a Broadway play for the pay channel.