Let’s pour one out for Showtime. The 46-year-old pay TV network, home to many great shows and many stinkers, was pretty much murdered this week, the latest casualty of the Great Netflix Correction. And we all kinda shrugged.

Yes, Showtime will live on as essentially a studio servicing the Paramount+ streaming platform and the rebranded linear TV network—dubbed “Paramount+ with Showtime,” a clunky name that will be used by exactly nobody besides cable company salespersons and the media. Paramount Global C.E.O. Bob Bakish is saying this is a rebirth, not a gutting. But that’s spin; this was the guillotine drop that had been feared for months, if not years, by Showtime employees and fans of soapy dramas with nudity in the first 15 minutes. I’m told the accompanying massive layoffs are likely just weeks away. (Paramount declined to comment.) 

So, why Showtime and why now? We can talk about creative misfires or strategic errors—and there were many. I’m old enough to remember way back, in 2012, when Showtime was bragging to Bill Carter about its 21 million subscribers, up from 14 million in 2005, and within spitting distance (OK, a loooong spit) from HBO at 28 million. The shows—Homeland, Dexter, Weeds, Nurse Jackie, Shameless—were talked-about and Emmy winning, and the network programmers, Bob Greenblatt and then David Nevins, were considered upper-tier creative executives. “Those were exciting times when only a couple of networks were doing premium comedy and drama,” Greenblatt reminisced in an email to me last night. “You really felt like a show could make a cultural impact.” What a time.

But it was all a bit of a façade, right? Showtime had a nice run creatively and financially, and it liked to play up its rivalry with HBO, but the truth was that HBO, even when it dipped creatively, was always the dominant business. It had the brand, the more consistent creative engine, and most importantly, the wherewithal to compete. HBO was generating more than $1 billion in profit in 2011, per the Times, while Showtime earned less than $700 million. And HBO owned nearly all its programming, while Showtime made only about half its shows. 

Showtime chugged along back then partly because the two main premium TV services in the U.S. were locked in a symbiotic relationship, often sold together (or offered as a loss-leader perk) by cable companies as part of the extremely lucrative bundle business. So HBO linear gains often translated to a boost for Showtime, too.

Then the streaming wars happened. Suddenly, Showtime had to justify itself as an à la carte digital proposition at the exact moment that Netflix, Amazon Prime Video and the others started bidding up the price of the best projects that HBO didn’t want—and many that it did want. Way behind in streaming and less well-funded by owner Sumner Redstone and CBS C.E.O. Les Moonves (at his core a broadcast TV guy), Showtime was forced to spread its budget thinner as an all-audience premium play. 

That’s tough. It doesn’t really excuse bad shows like The First Lady or Kidding or SMILF, but it was frustrating for Nevins, Jana Winograde, Gary Levine, and their teams to know they often couldn’t compete for the top projects in those Peak TV years; they had a few, like Billions, but at times they never even got in the room on the best pitches. By the end, they had a decent hit in Yellowjackets, but they were mostly making do with reboots of Twin Peaks and Dexter, and low-impact shows like I Love That For You and American Gigolo, which might be the exemplar of the perils of the streaming age: an expensive reboot that no one asked for, which was executed poorly, and turned out to be a waste of a great TV star in Jon Bernthal.  

So it wasn’t a surprise when, in 2021, then-ViacomCBS rebranded CBS All Access as Paramount+, its flagship streamer, essentially starting a countdown doomsday clock on Showtime. Nevins eventually left after a power struggle with fellow TV executives George Cheeks and Chris McCarthy, who rode the success of Yellowstone and its spinoffs to oversee the linear network, with Tom Ryan handling streaming. And the diminished Showtime output will now be “franchises,” whatever that means, for a network whose branding was built on fresh and boundary-pushing ideas. Paramount+ with Showtime “will divert investment away from areas that are underperforming and that account for less than 10 percent of our views,” Bakish said this week. “We have already begun conversations with our production partners about what content makes sense moving forward and which shows have franchise potential.”

Translation: We’re canceling a bunch of stuff and will fill the linear channel with a drastically reduced number of Showtime-branded originals and movies, and some Paramount+ shows—the Pay TV equivalent of Ridiculousness, something that can be repeated over and over to milk the subscriber fees until they dwindle to nothing. “Paramount+ with Showtime” will become just Paramount+, the streaming service, maybe with a Showtime tile. It’s pretty much the reverse of what WarnerMedia did with HBO Max, where tons of shows were made exclusively for streaming and never appeared on HBO linear. Now, in a sign of these frugal times, Paramount is taking the streaming shows and repurposing for linear, and vice versa.

Why? Cost savings, of course. “We think Showtime is doing $2 billion in revenues on a roughly $1 billion content budget,” Wells Fargo analyst Steven Cahall wrote this week of the coming cuts, estimating “total cost savings in the $300-$400 million range.” To that end, they’re following the hot new trend of scrapping completed shows, like the adaptation of Lisa Taddeo’s Three Women with Shailene Woodley, and I’m told everything is basically on the table. Agents are already scrambling to salvage or shop their clients’ Showtime projects, but it’s not exactly a seller’s market these days.  

The Content Recession

In fact, way beyond Showtime, it’s getting downright brutal out there. Fundamentally, streaming is a bad business. Costs are greater than revenue, and even if/when these services reach profitability, it’s probably never going to be as lucrative as cable. We’ve kinda always known that, but since the Great Netflix Correction, we really know it now. There’s no going back, of course, so these media companies are figuring out how to make streaming work, and in a manner that convinces investors to back their strategies. Hence: subscription businesses have now become subscription + ads, and will soon become subscription + ads + a free tier with many more ads.  

And the spending is coming down. We’ve realized we can manage without supporting 600 scripted shows and dozens of linear and digital distributors, as the industry did in 2022, per the latest FX numbers. So Hollywood is telling Wall Street: We will do less! But still enough! And trust us to cancel the exact stuff that is not essential to our existence!

Even if it’s been greenlit or already made, let’s throw back the small fish and only focus on potential whoppers. Hence Showtime with Three Women. Or HBO forcing Lionsgate to take Minx to Starz, its own streamer. Or Netflix giving back two completed films, The Inheritance and House/Wife. One producer texted me, How bad does a movie need to be for Netflix to say ‘Nah, we’re good’? 

I suppose we have our answer, but Netflix was greenlighting movies at such an extraordinary pace, and there’s simply a more truncated pipeline now. “A little less better and more great,” in film chief Scott Stuber’s words. Netflix financed these two films, so if the producers find a buyer, great; Netflix will either be made whole or eat the shortfall in the sale price. Not ideal, but potentially better for everyone than dumping a movie Netflix doesn’t want on a service where nobody can find it.

That’s the thing: There are costs to hosting all this content on a streaming service. You’ve gotta pay the guilds, devote the infrastructure, maybe market a little. Creators now live in fear that their show will simply be disappeared from the streamer that bought it, as Showtime, HBO, AMC and others are starting to do. But simply taking down little-watched shows saves millions of dollars in the aggregate. And hey, if these shows can be licensed to some other platform, either exclusively or non-exclusively, the extra dough can go back into new shows or pay off debts. Sure, there’s a brand risk to HBO in having Westworld stream for free on Tubi and Roku, but when Warner Bros. Discovery C.F.O. Gunnar Wiedenfels is selling off everything but naming rights to the Clint Eastwood Scoring Stage, brand risk is a minor concern.

Are you really gonna cancel your subscription if FBOY Island and An American Pickle aren’t available? Broadly, this isn’t that different from the aggressive windowing that has powered the TV business throughout its history. Only this windowing is opportunistic, rather than through a customary pattern. Here, we’re pulling shows and saying to potential buyers, How long do you want this? And can you please pay cash right now?  

Wall Street appears to like this strategy, however desperate it seems. Despite the soft ad market, the entire media sector is up significantly this year, after an awful 2022. Paramount, in particular, had one of its best January performances ever. Ben Swinburne, the Morgan Stanley analyst, declared this week that Paramount+ “has outperformed expectations and is well on its way to a 60 million-plus subscriber business and $4 billion-plus in revenue this year.”

Nobody seems to care about Showtime. So yeah, we all knew this day was coming. Mark Zuckerberg described 2023 as the “year of efficiency,” but in Hollywood that means the ecosystem is contracting and consolidating, and there will be casualties. Starz, another mid-tier cable net-turned-streamer, has been for sale for how long? AMC isn’t fooling anyone with AMC+. And the Disney reckoning—sorry, reorganization—is coming shortly. For the cable TV business, we’re entering that sequence late in Titanic where the stern is high in the air, the whole boat is about to violently break in half, and even those strong enough to stay afloat thus far will soon begin sinking fast. At least we know Showtime won’t be alone in the afterlife.