InDemand to shutter L.A. base
Copyright 2004 BPI Communications Inc.
The Hollywood Reporter
February 6, 2004, Friday
Pay-per-view distribution giant InDemand is eliminating at least 12 jobs and closing its Los Angeles office beginning June 1.
The cuts, which will be concentrated largely in the affiliate relations and finance divisions, also affect InDemand's New York headquarters, where most of its 200 employees are based. While some of the more senior employees at InDemand's office in Century City will transfer back to the East Coast, Senior VP Programming and Development Dan York will leave the company.
"The staff reductions are part of an overall restructuring to base all of the company's business functions in New York," InDemand spokesman Joe Boyle said.
While the reductions are being explained as a response to the consolidation of the cable industry, observers are questioning the future viability of InDemand, which is jointly owned by cable operators including Comcast Corp., Time Warner Cable and Cox Communications. "It's gotten to the point where it has outlived its usefulness," one PPV expert said.
InDemand aggregates content including movies and live events for 1,700 cable systems nationwide. The focus of its business shifted last year from PPV, which consists largely of wrestling and boxing exhibitions, to video-on-demand offerings, which InDemand distributes to roughly 8 million homes. InDemand also recently launched a pair of linear channels for high-definition content.
The closure of InDemand's West Coast base coincides with its near completion of negotiations for -on-demand rights for movies from the major studios. The Walt Disney Co. remains the lone holdout but is eventually expected to join the likes of Warner Bros., Sony, Universal and Paramount as providers of top titles. InDemand first opened its Los Angeles office in 1999 to be closer to the major studios.
While the operators never intended for InDemand to be a revenue generator, its losses have been escalating at a rate that has alarmed Comcast, according to sources, now the majority shareholder in InDemand as a result of its acquisition of AT&T Broadband last year.
Contributing factors to those losses include steep guarantees the studios are exacting on buy rates on movies via VOD, a platform with limited distribution. InDemand's other programming staple, live events, have generated such diminishing returns in recent years that sources say Comcast and Time Warner are at odds over putting greater emphasis on adult programming.
Industry consolidation also has led such top cable operators as Comcast and Time Warner to negotiate directly with the studios rather than involve InDemand as a middleman distributor, especially because VOD rights are increasingly a small component of larger negotiations between media conglomerates looking to negotiate premium carriage deals for their cable channels and other synergistic concerns.
The lack of such marquee names as Mike Tyson and Hulk Hogan in boxing and wrestling in recent years has diminished the appeal of PPV events during the last decade. Some of the strongest performers in the field of late have been cheesecake-oriented fare such as the Super Bowl halftime alternative the Lingerie Bowl and reality series "Can You Be a Porn Star?" — a direction conservative-minded controlling interest Comcast isn't likely to be interested in further pursuing.
InDemand first started as single-channel service Viewer's Choice in 1985. By 2000, it had mushroomed to 35 digital channels and rebranded itself as InDemand.