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Cowboys on cable’s digital frontier

Jun 11, 2001  •  Post A Comment

Jeffrey Reiss, who helped found Showtime, Lifetime Television and pay-per-view Request TV, has a new brainstorm. He’s in the midst of creating a six- to 10-channel special-interest network he hopes to see distributed in at least 25 million to 30 million of the nation’s 50 million digital cable homes.
His new company, TViFusion, is recruiting independent channel developers and will serve as an incubator of sorts, assisting them in securing funding, channel branding and positioning, and in management of general business operations. Mr. Reiss, who serves as TViFusion’s CEO, thinks it’s a relatively low-cost proposition that cable operators trying to figure out what to do with extra bandwidth will appreciate.
Mr. Reiss got the idea when he was toying with the notion of creating programming to fulfill his personal interests. He wanted to start a channel that would focus on his Jewish heritage. “People are fascinated by something they don’t know much about,” he said. “That’s why I became passionate about the Jewish experience highlighted by the devastation of the Holocaust and the miracle of Israel. It was a channel I really wanted to do, but alone, the economics wouldn’t work. So in order to get there, we had to create TViFusion.”
Mr. Reiss raised an initial $1 million last year, then in May he secured a $10 million funding commitment from Warburg Pincus, a large private equity firm. David E. Libowitz, managing director at Warburg Pincus, said he was impressed with TViFusion’s top management lineup and the promise of a business model that “enables cable networks to significantly reduce their cash burn rates.”
Mr. Reiss envisions TViFusion making distribution deals, selling advertising and providing other services such as subscriber management and t-commerce. The multiple channels also present cross-promotion and cross-selling opportunities.
TViFusion’s headquarters is located in a former riding stable on the outskirts of Denver. The building was a working barn when Mr. Reiss bought it. His office is in what was the hayloft. “It’s a romantic notion for a guy from Brooklyn,” he said. “I see myself as sort of a digital cowboy.”
Bryan McGuirk is TViFusion’s president. The former vice president of affiliate relations for NBC Television Network, he worked for Turner Broadcasting before going to NBC. At the moment, he and Mr. Reiss are sorting through stacks of applications from hopeful channel developers. They’ve winnowed the pile down from 60 to 10. Now they’re choosing the first four channels that they’ll work on, two of which they hope to have up and running by the end of the year.
Both men dance lightly around the actual subjects on which these new networks will focus, but Mr. Reiss says it is likely that they will fall into the general categories of sports, information-entertainment and music-“areas in which there is interest but not much, if any, competition.”
Said Mr. McGuirk: “We have to make sure that there is a big enough audience for the programming. You can come up with different ideas, but we’re not the needlepoint and puppy channel. We don’t want to go too far in that direction. The things we choose have to be different-but in demand and something that will likely draw subscribers.”
The content will be delivered through national satellite, but Mr. Reiss envisions it as locally customizable, because that was one of the stipulations he heard most often when he spoke to cable system executives and asked them what they wanted.
“The cable operator is going to be our customer. We gave them a list of about 25 different program concepts and target audiences. They validated some of our ideas, and we heard about others that they didn’t think would work.”
Mr. McGuirk, who continues to pound on the doors of MSOs, says bringing fresh revenue to cable operators is the biggest issue at hand. He thinks TViFusion has the potential to make a big dent in the additional $8 million to $10 million cable systems need to make the digital conversion profitable.
“New revenue models are what is driving our planning process,” he said. “We want to make sure that we are as innovative as we can be in creating new revenue streams.”
How risky is this venture? Mr. McGuirk says it’s not very risky at all. “I think we’re in the right place in the right time. This group has been there, done that, and understands how to do it again.
“I traded in my corporate office in Rockefeller Center to come here and work in a barn, so I’d better believe that.”