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NBC Mulls Networks

Aug 4, 2003  •  Post A Comment

NBC Cable is “looking hard” at creating one or more new digital networks targeting Hispanic Americans. Although no decisions have been made yet, a new network, possibly built around telenovelas or Spanish-language films, could be greenlighted early in 2004.
NBC also is in discussions that could lead, even sooner, to the creation of one or more Spanish-language video-on-demand services. Those VOD services could go beyond entertainment-on-demand to offer VOD Hispanic-oriented sports programming.
In all these cases, NBC, which already owns Telemundo, the second-largest Spanish-language network in the United States, and mun2, its younger-skewing spinoff network, would build the new services from the library of Spanish-language programming that it now controls.
NBC is currently conducting an inventory of that library to determine exactly what rights it holds and how best to deploy those assets.
David Zaslav, president of NBC Cable Networks, said distributors are very interested.
“A number of distributors have indicated that they would be willing to pay significant sub[scriber] fees if we would be willing to get behind some additional [Hispanic] channels,” Mr. Zaslav said. Also, “there’s some real interest in offering incremental Hispanic programming on the VOD platform.”
In fact, major multiple system cable operators themselves have made recent moves to court the more than 37 million Hispanic American viewers in the United States and to further exploit the burgeoning Hispanic television and advertising marketplaces. At the beginning of this year, for example, Time Warner Cable launched DTV en Espa ‘ol, a digital Spanish-language tier, in the New York City area, where TWC has approximately 1.2 million subscribers. In all, approximately 30 percent of the population in the New York and New Jersey area that TWC serves are of Hispanic heritage. Currently, 19 of TWC’s 31 divisions offer a dedicated Hispanic tier of programming, according to a company spokesman.
And last May Comcast, the nation’s largest multiple system operator, launched new CableLatino, CableLatino Optimo and CableLatino Completo programming packages as well as Hispanic a la carte options in a number of its largest markets, including Albuquerque, N.M., Atlanta, Boston, Chicago, Dallas, Denver, Los Angeles, Miami and San Francisco, among others. In all, Comcast counts more than 3 million Hispanic households in its various markets.
In recent conversations with TelevisionWeek, Mr. Zaslav emphasized the challenging economics of the digital cable marketplace, distinguishing between the library-based digital channels, which he said could be economically viable today, and those digital channels that set out to create or acquire original content, including live content, which he said would not be viable in the present climate.
“The library services actually can survive quite well within the digital environment, particularly in a situation where the owner of the library isn’t interested in selling that content,” Mr. Zaslav said. “Because the cost is so low of using that library content, that creates a channel with an economic model where you can wait out the marketplace and hope that the [digital] penetration level rises, and hope that [in the future] there’s more digital boxes per home.”
Currently, only about 20 million homes have digital cable, and many multiset homes have only one or two digital boxes, Mr. Zaslav noted. “So 1, you don’t have a broad net, and 2, within the net you’re not reaching all the TV sets within the home,” he said.
The bottom-line digital-channel problem, according to Mr. Zaslav, is that “as soon as you start paying for content in any meaningful way, it’s very difficult to get around the challenge of the business model, because you’re just not reaching enough scale, because the cable operators and distributors just aren’t willing to pay the kind of sub fees that you would need in order to make up for the fact that you don’t have enough scale to get significant advertising revenue.”
However, the good news for prospective digital channel operators is that the industry is committed to pushing penetration forward, so both ad dollars and sub fees may increase enough in just a few years so that that original- and live-content digital networks will become viable, Mr. Zaslav said.
By press time, neither Comcast nor TWC spokespersons were able to confirm they had held discussions with NBC Cable on the subject of new digital channels and VOD opportunities.
Mr. Zaslav, who is understood to also be deeply involved in NBC’s bid for the Vivendi Universal entertainment assets, including its cable networks, declined to discuss NBC’s VUE bid.