The power of content. If you want MTV and VH1 or your digital tier, you must take the 4 new digital channels. Interesting.......................
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MTV, VH1 Join Parade of Programmers
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New York -- Programmers, including MTV Networks Inc. and Walt Disney Co., are rushing to stake their claims in the new digital landscape.
Last week, MTVN laid out plans to roll out a package of seven digital music networks next July in genres ranging from rap to rock. MTV's announcement came just a day after Lifetime Television said it plans to launch the Lifetime Movie Network next September, for analog and digital distribution.
The sudden abundance of digital channels is no coincidence. Programmers are trying to have product ready that will get them shelf space on the digital-video tiers that MSOs started rolling out this year.
"If you don't have product in the wings when a cable system starts to provide digital capacity, you get left behind," said Tom Wolzien, an analyst at Sanford C. Bernstein & Co. "This [MTV's and Disney's digital networks] makes sense. Think of those as placeholders."
The land-rush to multiplex is reminiscent of several years ago when programmers such as MTV made grandiose plans to multiplex. MTV tabled its earlier strategy to launch three multiplexed services when it found no takers.
Now MTV, jumping on the digital bandwagon along with other programmers,<Picture: MTVN CEO Tom Freston> is developing "The Suite from MTV and VH1." It will offer seven music-video services featuring genres that are extensions of MTV: Music Television and VH1 with one wrinkle: With the exception of M2, operators must take all six services or none at all.
Lifetime's movie channel is one of four digital networks that Geraldine Laybourne, president of Disney/ABC Cable Networks, alluded to during a speech last month in Washington, D.C., according to Lifetime president Douglas McCormick.
The selling point for "The Suite," according to MTVN president and CEO Tom Freston, is that it can help drive digital distribution for cable operators.
"We've had preliminary talks with virtually all the major MSOs, and what they tell us is obviously for them it's really important to sell these digital boxes and get them into homes," Freston said. "One thing that's going to help that is brands -- viable brands. And MTV and VH1 are certainly viable brands that mean something to people."
However, at least one programming official from an MSO that has already launched digital -- and is already marketing it to consumers -- was lamenting that MTVN and Lifetime are so late coming up with digital networks.
"I wish they had come out with this stuff a little bit earlier," said Bob Wilson, Cox Communications Inc.'s vice president of programming. "It would have helped us plan in advance. Now it's all a matter of how flexible they're willing to be on the pricing."
Cable operators this year finally started rolling out the digital set-top boxes that will increase channel capacity, creating additional berths for networks to gain carriage.
Discovery Communications Inc. had four digital networks ready for them at the get-go. Discovery's services are part of the digital platforms that Tele-Communications Inc. and Cox launched this year, which have created a cache of new channel capacity.
"There has been a limited amount of real estate [channel capacity for new networks]," said Gary Farber, an analyst at NatWest Securities. "But with digital, it's as if midtown Manhattan had three more blocks added."
The model for all the digital networks is the same: to program them inexpensively with library product.
MTV's The Suite will include as its flagship the existing M2, which will be available as a stand-alone analog channel as well as part of the digital package, Freston said. The rest of the digital channels include: "MTV Ritmo," which has a Latin flavor with dance/pop, Tejano, Cuban and Ranchera music; "MTV Indie," featuring rap and techno from independent labels; "MTV Rocks," hard rock and heavy metal; "VH1 Soul," with soul and rhythm and blues; "VH1 Country"; and "VH1 Smooth," which offers jazz, New Age and adult contemporary.
"We think it's [digital networks] a great opportunity to broaden our business and become a more fully integrated music supplier," Freston said. "This step gives us businesses in analog, digital and online."
Operators will not be able to pick and choose just a couple of the The Suite's digital networks, Freston said.
"You can take M2 separately, analog or digital, but we're not allowing `The Suite' of six to be broken down," Freston said. "They work well as a package and that's the way we'd like to market them."
The rate card for The Suite will "be a function of the type of carriage we have for our analog services" from an operator, Freston said. The license fees for the digital package will vary roughly from 10 to 20 cents a month per subscriber, with discounts based on the more MTV services an operator carries.
Wilson stressed that flexibility in pricing will be a key in terms of whether Cox considers adding these services onto its existing digital tier.
"We've gone with a certain group of services and priced it and packaged it in a certain way, such that it made financial sense," Wilson said. "We pretty much went out with what was available at the time. ... There's going to be some evaluation needed as these new services come out. We can't disrupt too much existing service."
According to Wilson, "As the new stuff comes out, and as compelling stuff comes out, how do we get it into our packages? They've got to make it fairly easy for us."
The Suite and Lifetime's movie network will be offered to direct-broadcast satellite providers as well as cable, network officials said.
MTV faces unique competition with its digital package. TCI's Headend in the Sky service, which delivers digitized programming to TCI and non-TCI systems, already offers The Box Set, four new digital music multiplex services from The Box. TCI is also acquiring The Box.
The Box Set includes: Pulse, Top 40/adult contemporary music; Classic, music videos from the mid-'70s to the '90s; Urban, contemporary rhythm and blues, hip-hop and reggae; and Edge, cutting edge alternative and modern rock.
Freston said MTV has preliminarily discussed The Suite with TCI. A TCI spokesman said the MSO would "absolutely" be open to talking to MTV about The Suite for HITS, even though it's already carrying The Box Set.
"We always keep an open mind," he said.
Alan McGlade, president of The Box's parent, The Box Worldwide Inc., said his four digital music-video channels have a jump on MTV's lineup.
"We're already up with four digital channels now," McGlade said. "We're aggressively marketing them. And we've had several good meetings with MSOs outside of TCI."
MTVN, part of Viacom Inc., doesn't expect to cannibalize its MTV or VH1's viewership with its digital channels, because the programming will be different, Freston insisted.
"We don't think that's [cannibalization] a big threat," he said. "The programming on these channels, these formats, has been carefully selected to largely feature the type of music that is not played to any large extent on MTV or VH1. So the greater part of the viewership of them would be by people who now don't watch much MTV or VH1 at all."
MTV won't attempt to sell advertising on its digital networks until they hit a critical mass in terms of distribution, Freston added.
Following in the footsteps of several other programmers, The Walt Disney Co. plans to launch four digital networks, reportedly including one with soap operas and another for kids. |
