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How Oxygen Media Pumped Up Results

Nov 16, 2008  •  Post A Comment

Just a year after being acquired by NBC Universal, Oxygen Media has rebranded, cut costs, added distribution and viewers and pumped up its profits.
Now it’s ready to add some new original series and launch a new e-commerce business selling products attached to its brand and programming.
New shows in development to match its new “Live Out Loud” slogan include “The Naughty Kitchen,” featuring 20-something Dallas chef Blythe Beck, and “The Girls,” featuring three talented young singers (who happen to have celebrity lineage) looking to make it in Nashville. One of the women is a granddaughter of John Wayne, another is a granddaughter of Loretta Lynn and the third is a great-great-great-great-grandniece of Daniel Boone.
“It’s really through characters that we push that Live Out Loud brand,” said Amy Introcaso-Davis, named senior VP of original programming and development for Oxygen Media in May.
Those shows might join “Dance Your Ass Off”—a combination dance and diet show—on Oxygen’s schedule next year, she said. “Dance” will be cross-promoted on a new “Never Say Diet” section on NBC Universal’s iVillage Web site.
Oxygen Media was launched in 2000 by former Nickelodeon chief Geraldine Laybourne with an all-star roster of backers including Oprah Winfrey. NBC Universal paid $925 million for the company last November, and Jeff Gaspin, president and chief operating officer of NBC U’s Universal Television Group, is “very happy” with the purchase.
“We are exceeding our plans in spite of the difficult economy,” he said, noting Oxygen already is benefiting from the NBCU distribution and marketing muscle. It also was able to save about $40 million by having affiliate relations, business affairs and other back-office functions handled by the NBCU cable infrastructure.
“I think they are doing great, although most of the synergies there are on the cost side,” said Derek Baine, analyst at SNL Kagan. Mr. Baine estimates the network’s cash flow in 2008 will be $78.9 million, up from $40.8 million in 2007.
Mr. Gaspin confirms that profit from the network about doubled.
“It’s fair to say we’ve laid the groundwork to now set us up for terrific growth as we have done with Bravo before, and as we did with USA and Sci Fi when we acquired them,” he said. “Now 2009 will be about the type of series they put on the air.”
After the acquisition, Mr. Gaspin added Oxygen to Bravo Media President Lauren Zalaznick’s responsibilities.. She named her marketing and digital head, Jason Klarman, as the network’s new general manger in January.
With NBC Universal’s distribution clout and promotional muscle, a fresh coat of paint and a new brand identity, Oxygen has been increasing viewership despite relying mostly on the programming it inherited.
In the third quarter, ratings among women 18-34 were up 42% in prime time from a year ago. Ratings among women 18-49 rose 33%.
Those gains leave Oxygen, which ranked 35th among ad-supported cable networks in total prime-time viewers during the third quarter, still far behind Lifetime in the women’s category. Lifetime had an average of 205,000 women 18-34 watching in prime time, compared to Oxygen’s 84,000.
And while Oxygen shows began topping 1 million total viewers for the first time this year, Lifetime’s top show, “Army Wives,” draws about 3 million.
Lifetime doesn’t like to compare itself with other, smaller women’s networks and declined to comment, but Kim Martin, president of Rainbow Media’s WE Women’s Entertainment network, noted her channel has rung up big increases in viewers this year as well, thanks to original programming including new series “The Locator.”
“Anybody who gets female eyeballs is a competitor, no doubt about that,” Ms. Martin said. “There are so many women out there looking for good entertainment choices, and the networks each speak to a slightly different audience.”
Even so, under NBC Universal, Oxygen is moving up the rankings when it comes to women viewers, and that’s translating into advertising dollars. In the past upfront, Oxygen added 100 new sponsors and saw its upfront sales rise 80%, Mr. Klarman said.
“I have confidence in it because of who the people are behind the network,” said Peggy Green, vice chairman at Zenith Media, citing Ms. Zalaznick in particular. “I think their slogan, which is Live Out Loud, is great and I think they’re starting to get better recognition as a brand. But that’s going to take more than one year.”
Ms. Zalaznick said the year has gone by in “an eye blink.”
She sees Oxygen as a network appealing to 20-somethings she calls “Generation O,” made up of women “who have grown up expecting a lot for themselves, being comfortable with who they are and having a lot of fun along the way.”
Oxygen fits into Ms. Zalaznick’s portfolio of female-skewing brands called Women@NBCU. The company is attempting to convince advertisers that if they want to reach women, they can do it through a package of NBCU properties that can include Oxygen, Bravo, NBC’s “Today,” iVillage.com and prime-time shows like “Lipstick Jungle” (until it was canceled last week).
“There really does seem to be a voracious appetite from the consumer for this type of brand,” said Mr. Klarman, pointing to a record year, record quarters and 19 of the channel’s 20 highest-rated telecasts. “That’s pretty good.”
Especially considering that the wins have come as the network relied on leftover programming. Its top show was “Tori & Dean” featuring Tori Spelling. Ratings rose this past season, but Mr. Klarman declined to say whether the show would return.
“We love Tori,” he said.
“The water level here has risen dramatically and all of those stats indicate that,” he added. “But I think that has changed our definition of success. … Finding the next hit is what is going to be our biggest challenge next year.”
“We have a lot in development right now,” Ms. Introcaso-Davis said. The network is considering all genres and formats, including competition shows and documentary series featuring both real people and celebrities.
Outside of the possibility of an original movie or two, the network is not looking at scripted programming, Ms. Zalaznick added.
Mr. Klarman believes viewers will want to buy Oxygen merchandise and is launching an e-commerce initiative on the network’s Web site.
He said the venture represents an opportunity both to generate revenue and build viewer attachment.
“We talk about this Generation O—they’re trenders, spenders and recommenders, right? Shopping for them is really a form of entertainment,” Mr. Klarman said.
The merchandise—yoga pants, coasters and such—will be lightly branded. An “Obsessed” T-shirt will feature the O from the Oxygen logo.
“It’s a way to connect to the brand without literally being a walking billboard for Oxygen,” he said.

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