WITH PROVOCATIVE SHOWS like Sex and the City, "The Sopranos," Curb Your Enthusiasm, and "Six Feet Under," the HBO channel has become one of the biggest players for its parent company, Time Warner, Inc.
Over the last five years its biggest successes have helped the network steadily draw in new subscribers and increase its earnings by 50 percent. But with the loss of two of its biggest hits--"Sex and the City" is wrapped up and "The Sopranos" begins its penultimate season Sunday--HBO has begun to rethink its business plan.
The network doesn't expect it will be hurt financially, but finding ways to expand will be critical for HBO's continued success.
Just as HBO realized years ago that it couldn't sustain itself as a premier movie channel, they've learned that relying on subscriber fees alone won't preserve growth. That means that HBO is going the way of most successful network shows--who have long collected millions from selling their reruns--and preparing for syndication.
It's surprising that a racy show like "Sex and the City"--never one to skimp out on language and nudity--could ever be cleaned up enough to even show on cable. But this summer the show will start replaying on TBS, with the shows edited so that commercials can be inserted.
HBO has already filmed a less provocative version of the show for international sale, but still a lot of the suggestive material will have to be toned down. Kim Catrall who played the voracious Samantha Jones, will likely find a lot of her scenes deleted, but executives at HBO insist that people who have never seen the show won't realize anything is missing.
Jeff Cusson, a publicist for "The Sopranos," says that so far there are no plans to syndicate the show.
HBO has already proved that a strong market exists for DVD sales of its shows, which will also continue to boost its profits, especially in the wake of nostalgia for "Sex and the City."
"The Sopranos," which comes back for its fifth season on Sunday, raked in more than $130 million selling DVD sets of entire seasons during the first six months of last year. "Sex and the City" garnered $66.3 million, according to Adams Media Research.
HBO has also started to dabble in small, inexpensive movies like "Real Women Have Curves," "American Splendor," and "Elephant," and was an investor in "My Big Fat Greek Wedding." HBO Independent Productions, inactive for a few years save for its involvement with CBS's "Everybody Loves Raymond," is starting up again.
Even with plenty of secondary sources of income, HBO has to keep an eye towards its first priority: retaining current subscribers. According to the Wall Street Journal, HBO loses 4 to 6 percent of its subscribers every month because they drop their service, move, or sign up for a particular show and then drop again at the end of the season.
Continued success means putting out cutting-edge shows that other networks can't match.
HBO's latest ventures, the now-cancelled political reality show "K Street," and "Carnival," a show about a traveling circus during the Depression, didn't catch on like its biggest hits.
Their next big offering is "Deadwood," from "NYPD Blue" creator David Milch. It is a period piece described on HBO's website as "a drama series that focuses on the birth of an American frontier town . . . in an age of plunder and greed . . . where everyone and everything has a price. A lot of the action is set in a brothel and storylines will involve prostitutes, city dudes, and gunfighters."
In other words, something for everyone.
Rachel DiCarlo is an editorial assistant at The Weekly Standard.