New channel Epix hopes to shake up premium cable with hipper fare

"There's a difference between availability and usage," says Media Valuation Partners principal Larry Gerbrandt. "Box office admissions are flat and have been for 10 years, so movies aren't overexposed there. DVD sales are flat to down. VOD isn't growing — and iTunes is in that window. You don't see studios jumping up and down when they get their iTunes checks."

Greenberg adds that "movies repeat with high ratings — they'll perform over and over and over again, whereas originals (sitcoms and dramas such as Big Love and The L Word) have a great first play, and sometimes a second play, but then they significantly fall off in ratings."

Building buzz

Indeed, the studios hope that they can do a better job than premium channels do of galvanizing fans, for example by offering outtakes, interviews and clips from actor auditions. The holy grail is to transform a single movie into a durable franchise that can generate a bonanza from sequels, DVDs, digital downloads and licensed merchandise.

Epix's backers think that they can use the Internet to help build buzz, especially among young viewers. People who get the channel from a cable, satellite or phone company will also be able to watch some films and programs online. There'll also be opportunities to buy merchandise and purchase or rent movies — with some revenue possibly going to the distributor.

"Feature films are special, and (most networks and providers) have turned it into a commodity," says Emil Rensing, Epix's head of digital media. "Because we're owned by the studios putting the titles out, we enjoy a unique relationship with the franchises," for example to develop social networks or offer unusual items such as movie ads that were rejected.

"We want to always be treating our fans like fanatics," he says.

Epix won't just rely on theatrical movies, though. The channel recently approved its first original series for 2010, Tough Trade— a one-hour drama about a Nashville music dynasty — that the executive producer of Weeds will make for Lionsgate.

Greenberg says that MTV Networks, which includes MTV, VH1 and Comedy Central, will help with comedy and music specials. He's also talking with an unnamed live-event company about a possible deal.

"We would like to have a live event as part of the launch," he says. "You want to find someone in the next six months who will stage one last event as part of the end of their tour."

It could be interesting, but only if Greenberg can persuade someone to show Epix.

"I don't think it's going to be easy," says Dennis Miller, general manager of Spark Capital, who used to work at Lionsgate. "The early days will be bleak. But over time, their (movies and shows) have real value."

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