Showtime CEO Admits No Plans For an IPO

Showtime, the Middle East DTH operator, is unlikely to have an initial public offering (IPO) this year as CEO Marc-Antoine d’Halluin admitted that an IPO "is not part of our plans."

Discussing the reasons why the operator decided not to conduct an IPO in 2006, d’Halluin explained "market conditions were the main reason behind that decision in terms of when we were planning to list. But, this gave us also the opportunity to revisit our strategy and to focus on things that had more immediate importance to the business, such as developing the company in the area of sports rights resulting in us securing the English Premier League (soccer) rights for the coming three seasons."

Progress nevertheless has moved apace for the operator: After d’Halluin joined the company last year, replacing Peter Einstein as CEO, the company relaunched its platform early this year. The relaunch exercise proved to have been a much bigger project than the operator previously envisaged. d’Halluin said "I think we have done substantial changes in the last six months. In fact, it has been a fairly massive relaunch exercise that we have just completed."

The new relaunch sees Showtime deliver 11 movie (Showcinema and Showmovie) channels, three sports (Showsports) channels and six new entertainment (Showseries) channels.

The new names indicate a more simplified approach to packaging channels. One of the key elements of the relaunch was its more structured and coherent pricing policy. d’Halluin said "we have introduced a family offer which is really a family/sports offer. This will be the package where you can access all the Premier League football. There is also content specifically targeted at the family. So, you have one of the movie channels, Show Movies Family, that is part of that package. There are also education and kids’ channels, documentaries, etc., in that package. So, that is a new package at a price point below our core full offering, called Premier. We took advantage of that relaunch to create more flexibility and different points of entry for new subscribers. By doing this, we are creating up-sell opportunities down the road to other packages."

Rights Win

Showtime also got a lift by winning the rights for the Premier League, one of the blue chip sports right packages available.

d’Halluin explained that "getting the Premier League on board is a key dimension of our new offer. We are focusing on the FAPL launch in August including the best possible live studio coverage in English and Arabic. We will also broadcast all the matches in English and Arabic."

PVR

With the platform relaunch and winning the Premier League rights realized, Showtime finds itself looking for its next goal. The operator, while not necessarily looking at HD in the short-term, wants to make its personal video recorder (PVR) strategy more attractive to customers. The strategy includes bringing an on-demand element to customers. "Our current focus is to make sure our PVR boxes, which have been deploying over the last 12 months, are successfully received by our subscriber base," said d’Halluin. "Part of that is the activation of a subscription video-on-demand (SVoD) offering to our PVR subscribers, which I think is unique. On our platform, the next challenge that we really want to succeed well in is to offer better satisfaction to our subscribers by having on-demand content at no extra cost as soon as this summer," he noted.

Expanding on the on-demand theme, d’Halluin noted "we have a box called ShowBox which has a capacity of 80 hours. Right now, only half of that capacity is activated. So you can record very easily the channels. We are only activating the other half of this capacity from this summer onwards by pushing into the box movies or series and the best selection of the current week’s content. We will change the content on a regular basis. That is going to be a really innovative feature that is going to be made available to our Showbox subscribers at no extra cost. You will get to see what you want, when you want, which is essential in today’s world."

In terms of when Showtime might bring HD to its customer base, d’Halluin said "I see HD a topic that will come into play in 2008-2009, and we are obviously working at preparing plans for this, but this is not an immediate priority for us."

The plans include discussions already underway with set-top box manufacturers. d’Halluin said "we are in discussions about the HD STB, but obviously it is too early for us to disclose the nature of these discussions. We are still reviewing our various options. You need to find the right timing for going from SD to HD. It is a whole industry move, so we have to work with a number of industry players here. I know you had ART testing HD last year with the World Cup, but this was really to please a small number of viewers."

In terms of how HD may develop in the region, Layla Najia, a research analyst at Arab Advisors Group said "HDTV has already begun, albeit slowly, in the region. There are two free-to- air (FTA) HD channels, LUXE.tv-HD and HD Visio promo, currently broadcasting on Arabsat. During the 2006 World Cup, DTH player ART did broadcast some of the matches in HD format; however, these channels are no longer on air. According to ART, it plans to launch two new HD channels by the end of the year. Similarly, pay-TV providers Orbit and Showtime have announced their intentions to broadcast HD channels in the near future."

IPTV and Mobile

While the operator hopes to launch on-demand services, and ultimately HD, it has no plans to enter into the IPTV space. "This is something which is not core to our strategy in the region," says d’Halluin. "However, we have ongoing cooperation with ShowNet. We have a common shareholder, KIPCO. But I would not say we are focusing yet on providing Internet access via satellite. We are mainly an entertainment platform. I have seen experiments of mixing the two technologies (IP and satellite). I know some of our competitors do that, but it is not part of our strategy at this point." Naija added, "IPTV is still growing in the Arab region and penetration is still relatively low as the concentration remains very much on improving the cellular sector. Wealthier countries such as Qatar have operational IPTV services; and Bahrain, the UAE and Kuwait have plans to launch it in 2007. Morocco also has IPTV services. So far it seems satellite will remain the dominant medium for broadcasting in the region."

Equally, mobile TV, is an area where the operator could look to play more of a role going forward. d’Halluin said, "There are lots of opportunities (in mobile TV). We are already providing quite a lot of content to a new mobile operator in Dubai, DU. We are having numerous other talks with mobile operators. Mobile TV is certainly something that will develop and grow in the next five years. In this region, it will probably have an even greater appeal than it does elsewhere."

— Mark Holmes

Contacts: Jennie Brown, Impact Porter Novelli (for Showtime), e-mail, [email protected]

Layla Najia, Arab Advisors, e-mail, [email protected]