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Angels, Emmys and DVD

Award haul promises to lift HBO miniseries' home-video sales 9/26/2004 08:00:00 PM Eastern

It's no accident that Home Box Office released Angels in America
on DVD just five days before the Emmy awards. Network executives were certain that the Shrine Auditorium would be filled with so many hosannas it would lift the already acclaimed miniseries in the aisles of Blockbuster and Best Buy.

The timing was heavenly. Angels
flew away with a record-breaking 11 Emmys, helping give HBO its largest prime time Emmy take ever: 32 total awards. Half were in the major program and acting categories: the remainder, in the creative and technical awards handed out a week earlier.

But it's only in the DVD business that HBO execs expect to see any direct correlation between the Emmys and business. While an Oscar may boost the box office for a movie still playing in theaters, HBO executives say Emmy awards have no evident effect on their subscriber sales.

"We do sell ourselves on the quality of our programming," Strauss says, "so anything that burnishes the brand and shines it up you like to have."

HBO trounced the broadcast networks. The closest was Fox, which scored 10 trophies. NBC followed with eight awards. CBS avoided a shutout in the major categories with a best reality show award for The Amazing
Race. In total awards, the broadcaster lagged A&E and tied four basic-cable networks and pay channel Showtime.

Angels
alone would have made HBO the top prizewinner, but the network also scored in the dramatic-series category. After years of missing out for best drama, The Sopranos
snagged one. (That also gave producer Brad Grey his first Emmy despite nominations for 18 shows he helped produce over the years.)

HBO pushed to win, conducting the same trade-advertising campaigns as many networks and producers and sending screening copies to members of the National Academy of Television Arts & Sciences, who vote on the annual awards. Indeed, industry executives say HBO Chairman Chris Albrecht's contract gives him a sizeable bonus for each major- category Emmy the network scores.

But the network won't be heavily touting its haul. Promotion will be largely limited to a spot running only on HBO's own air (hence, seen only by existing subscribers) and the giant, star-studded celebration the network threw after the Emmy Awards broadcast,

The Emmys are part of HBO's broader push to cast an image of smart, high-quality programming worth the monthly fee, since home video continues to diminish the appeal of the theatrical movies that still dominate the network's schedule. Its Emmy dominance also helps reinforce the networks as a creative power to writers, actors and producers.

But like all pay-cable networks, HBO is constantly fighting to hold onto its customers. Despite its high quality image, HBO churns out about 60% of its 27 million subscribers each year. Around half of those customers are "move churn": disconnecting, then resubscribing in their new homes. But the other half—8 million subscribers—exploit a cheap offer and sign on for a couple of months, then cancel, perhaps resubscribing months later.

"It's surprising to me how much of an audience they don't reach even though they get so much acclaim," says Linda Ong, a marketing consultant to cable networks. "But what the Emmys do from a brand perspective is give them more 'permission' to reach further."

The DVD market offers HBO its biggest payoff. HBO Video President Henry McGee loved the exposure of the miniseries' sweeping all four acting categories it was eligible for, sending co-stars Al Pacino, Meryl Streep, Mary Louise Parker and Jeffery Wright up to the stage. "Emmys can be very helpful in focusing on a program," says McGee, "particularly for HBO, when we're in approximately 30 million homes, just a fraction of TV homes."

The Sopranos
and Sex and the City
have moved so many DVDs that the network nearly recouped the entire production costs of early seasons from DVD sales alone. (The bar was raised when actors got raises in the later seasons.)

That was unimaginable when HBO approved and budgeted the series. Including DVDs, syndication and theatrical movies, more than 20% of HBO's revenues is from sources other than subscription TV.

The network has high hopes for Angels
DVDs, but HBO won't likely match the success of The Sopranos. "Angels
is a $60 million project. You would never expect to recoup that in ancillary markets," McGee says. But, he adds, HBO does hope to attract new viewers as the acclaim for Angels
spreads.

But HBO executives insist that a series' or movie's DVD prospects aren't as important as whether it works for the network. "The people who are paying the bills here are the subscribers," McGee says. "The key is what's going to draw the subscribers, what's going to retain those subscribers."

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