The Movie Channel
The Movie Channel is an American premium television network owned by Showtime Networks, a division of Paramount Skydance Corporation operated through its Paramount Media Networks division. Not including CBS, it is the oldest network owned by Paramount. The Movie Channel's programming mainly features first-run theatrically released and independently produced motion pictures, and during promotional breaks between films, special behind-the-scenes features and movie trivia. Originally operated and sold as a standalone service, at present, The Movie Channel is receivable to pay television subscribers primarily as part of the multiplex tier of parent network Showtime. The channel, along with its parent network Showtime and sister network Flix, is headquartered at Paramount Plaza on the northern end of New York City's Broadway district.
History
Early history (1973–1979)
The Movie Channel traces its history to the development of Gridtronics, a pay television service which delivered videotaped feature films to cable systems throughout the United States. The concept was originally developed in the late 1960s by Alfred Stern and Gordon Fuqua, both executives at multiple system operator Television Communications Corporation at the time, as part of a multi-channel service that was designed to include channels focusing on the arts, instructional programming and medical programs. The video-to-cable movie delivery concept was presented by Fuqua and Stern at the 1969 National Cable Television Association Convention. Over the course of the next several years, the two men subsequently discussed carriage agreements with other cable providers to distribute Gridtronics and engaged in discussions with various film studios to provide film content for the service. At the time of restructuring, TVC was purchased by Kinney National Company, the parent company of Warner Bros., in 1971, and gave the service the financial funding and content that it needed to launch.Kinney National Company's successor, Warner Communications, launched the Gridtronics service on April 1, 1973. Included among its initial offerings was the Warner Star Channel, a service developed as a vehicle to promote the Warner Bros. film library. The channel was initially offered on systems operated by Warner Cable Communications, and was eventually made available on Warner-Amex's experimental QUBE interactive service when the company launched it in 1977. Cable providers sometimes experienced technical problems trying to transmit the delivered tapes to viewers, especially when the tapes jammed during playback.
National expansion as The Movie Channel (1979–1983)
On January 1, 1979, Star Channel became a nationally distributed service after it was uplinked to satellite, becoming the third premium service to be distributed nationally through such a transmission method. In April of that year, it began to share channel and transponder space with Warner Cable's newly launched children's network, Nickelodeon ; this resulted in the latter service switching to an encrypted signal during the regularly scheduled network transition at 10:00 p.m. Eastern and Pacific Time on weekdays and 8:00 p.m. on weekends; Star Channel originally signed off at 4:00 am. Eastern and Pacific, three hours before the transponder space reverted to use by Nickelodeon. The channels were originally uplinked from a facility located next to WIVB-TV in Buffalo, New York; both later moved downstate to Hauppauge by 1981.On September 14 of that year, American Express reached an agreement with Warner Communications to buy 50% of Warner Cable Corporation for $175 million in cash and short-term notes. Through the formation of the joint venture, which was incorporated in December 1979, Star Channel and Nickelodeon were folded into Warner-Amex Satellite Entertainment, a company which handled the operations of the group's cable channels. Warner-Amex executive John A. Schneider served as the company's president; other Warner-Amex staff that manned Star/The Movie Channel's initial management team included executive vice president John Lack, programming chief Robert Pittman, and Fred Seibert, who was in charge of developing on-air promotions.
On December 1, 1979, the network was relaunched as The Movie Channel; the first feature film to be broadcast on the relaunched service was the 1953 comedy Roman Holiday. On January 1, 1980, TMC discontinued its time-lease arrangement with Nickelodeon and became a 24-hour standalone service. At that point, TMC became the first premium channel to air R-rated films during the daytime hours.
In 1981, The Movie Channel became one of the first television channels to broadcast movies in stereophonic audio; from that point until 1988, films presented in stereo were verbally and visually denoted in prime time lineup bumpers shown during promotional breaks within its daytime schedule – with titles for films available in stereo accompanied by the now-standard headphone symbol – and, until 1985, in a custom version of its feature presentation opening sequence. As the standard for television broadcasts in stereo was a few years away, cable operators had to simulcast the multichannel audio feed through cable radio decoders using FM receivers. Interstitial segments that aired during breaks between films for much of the 1980s included Behind the Scenes, The Heart of Hollywood, Reel Shorts and Reel Hits.
Operational merger with Showtime (1983–1985)
For much of its early years, The Movie Channel struggled in a race for subscribers in a pay television industry that pitted it against as many as seven cable-originated competitors, and even some over-the-air subscription services transmitted over independent stations in many U.S. cities such as ONTV and SelecTV. In addition to the launch of Cinemax as then-HBO parent Time Inc.'s movie-focused competitor to TMC in August 1980, the competition grew when Warner-Amex and Rainbow Media jointly launched the film and arts-focused Bravo in September 1980; Walt Disney Productions threw itself into the fray when it announced plans in early 1982 to launch family-oriented Disney Channel, a service which made its debut in April 1983.In August 1982, MCA Inc., Gulf and Western Industries and Warner Communications reached an agreement to jointly acquire TMC, under which the three companies would acquire a combined controlling 75% interest in the service from Warner-Amex Satellite Entertainment. The proposal was guided by the motive of the studios wanting to increase their revenue share for licensing movie rights to premium television services; there were also concerns by the major studios that HBO's dominance of that market and its pre-buying of pay cable rights to films prior to their theatrical release would result in an undue balance of negotiating power over them by HBO, resulting in a lower than suitable licensing fee rate that would be paid to the distributors for individual titles. The three companies officially announced their agreement in principle to acquire interests in The Movie Channel on November 11, 1982. Subsequently, in late December of that year, the U.S. Department of Justice launched a routine preliminary inquiry into the proposed partnership.
On January 7, 1983, Viacom International added itself as a partner and drafted an amendment to the proposal to consolidate The Movie Channel with the company's own competing premium service, Showtime. Under the revised proposal, the four studios would each own a 22.58% stake in the two networks, with American Express owning a 9.68% minority interest. In addition, the consortium would appoint a management team separate from those employed by the two channels – which would continue to operate as separate services – to operate the joint venture. However, the deal ran into regulatory hurdles since Warner, Universal and Paramount received 50% of their respective total revenue from film releases and licensing fees from premium services; furthermore, Showtime and TMC combined would control about 30% of the pay cable marketplace, creating an oligopoly with HBO.
After a four-month investigation resulted in the Department of Justice filing a civil antitrust lawsuit against the five parties to block the Showtime-TMC merger on June 10, 1983, the Department asked Warner and American Express to restructure the deal during hearings for the case. The Department's decision – citing concerns, including some expressed by HBO management, that combining the assets of Showtime and TMC would stifle competition in the sale of their programming and that of other pay cable services to cable providers – was despite the fact that, under the original proposal, MCA, Gulf+Western, and Warner had each agreed to continue licensing films released by their respective movie studios to competing pay television networks. The partners involved in the merger would also set standard prices for films that were acquired for broadcast on The Movie Channel and Showtime, either those produced by the studio partners or by unassociated film studios. To address the Justice Department's concerns over the deal, the four partners submitted another revised proposal for consideration on July 19, that included guarantees of conduct agreeing that Paramount, Universal and Warner Bros. would not receive higher residual licensing payments for films acquired by Showtime and TMC than that paid by other studios, and that all four partners would not permit the two channels in the venture to pay lower fees for films produced by the three studio partners than that paid by smaller pay television services for the same films.
After the revised proposal was rejected on July 28, Warner Communications and American Express restructured the purchase to include only Viacom as a partner, bowing Gulf+Western and MCA out of the proposed partnership. The changes – which Justice Department officials acknowledged would "prevent any anti-competitive effect from arising" following the merger, by allowing other premium services to enter the market should the venture significantly raise licensing fee prices for films – led the Justice Department to drop its challenge to the merger agreement on August 12; the department formally approved the deal the following day on August 13. When the deal was completed on September 6, 1983, the operations of The Movie Channel and Showtime were folded into a new holding company, Showtime/The Movie Channel, Inc., which was majority owned by Viacom, with Warner Communications and Warner-Amex as minority partners.
The Showtime-TMC joint venture also benefited The Movie Channel by allowing for the group to expand the channel's distribution. On December 12, 1983, the Times-Mirror Company announced that it would sell the subscriber base and transponder rights assigned to competing premium service Spotlight to Showtime-The Movie Channel, Inc. for an undisclosed price. Under the agreement, the four cable providers that backed the Spotlight venture – Times Mirror Cable, Storer Cable, Cox Cable and Tele-Communications Inc. – would offer Spotlight subscribers who subscribe to any of the systems an option to subscribe to either Showtime or The Movie Channel as a replacement, with those dissatisfied with Showtime/TMC's program offerings following a two-month sampling period during February and March permitted to exchange it for another premium channel at no charge. After Spotlight ceased operations on February 1, 1984, Spotlight subscribers who subscribed to any of the participating systems began to automatically receive The Movie Channel in markets where a provider was already carrying Showtime. Showtime-The Movie Channel President Michael Weinblatt estimated that approximately 100,000 subscribers of the four partner systems already received either Showtime or TMC, and that the absorption of Spotlight would increase the total number of paid subscribers to both channels by at least 650,000 to about eight million subscribers nationwide.