Gay-Oriented Nets Queue Up

Oct 25, 2004  •  Post A Comment

Three start-up networks are jockeying to become the first 24-hour nationwide channel for gays and lesbians, but experts say the crunched cable marketplace will not support all three ventures.

Though Logo, Here! TV and Q Television Network have little in common other than their target demographic, previous niche-filling trends have historically resulted in a field of challengers being reduced to one or two contenders.

“You have to ask yourself, `Can the marketplace hold three of them?”‘ said Brad Adgate, senior VP and corporate research director for Horizon Media. “I don’t think it can. If you have three cable networks, probably at least two will merge.”

The contenders and their strategies have substantial differences. Logo is the 11th basic cable offspring from the MTV Networks family. Here! TV is an independently operated spinoff of Regent Entertainment, a production company specializing in gay-themed titles, that’s gaining ground as an on-demand premium network. Q Television Network is a publicly owned, community-driven network available in a handful of cities that’s aiming for premium status, yet will still run spot ads.

What is clear: At stake is a demographic that’s affluent, entertainment-savvy and starving for greater representation on television. Analyst firm Witeck-Combs wrote that the estimated 15 million gays and lesbians in the United States enjoyed a 2003 buying power of $485 billion.

Robert Greenblatt, president of entertainment at Showtime, which airs the gay-themed “Queer as Folk” and lesbian-themed “The L Word,” said the time has arrived for the gay audience to finally have a network that programs directly for them. “The fact that there’s more than one is really a statement not only about the continuing emergence of an openly gay lifestyle, but an acknowledgement that this community has real purchasing power and disposable income,” he said.

Still, the networks face serious hurdles. All the issues that plague start-ups-such as a crowed marketplace and operators reluctant to add costs-apply here. Plus, experts anticipate gay-themed networks to meet a degree of controversy and skittishness in certain markets.

“I think their distribution is going to be like an ethnic cable network-pockets around the country that have a high concentration of this segment where penetration will be a no-brainer, and in other areas it’s going to be very difficult,” Mr. Adgate said.

To some observers, the idea that even one gay-themed cable network is economically viable is in itself an enormous shift from just a couple years ago. Joan M. Garry, executive director of the Gay & Lesbian Alliance Against Defamation and a former Showtime executive, theorized that 2004’s triple-network gold rush was the product of two things: “One is the exponential increase in the visibility of gay and lesbian people in America,” she said. “You certainly don’t target a market that is invisible. The second is the success of shows with gay content-like “Queer Eye for the Straight Guy” and “Will & Grace.”

Such breakout hits also illustrate that the biggest basic cable competitor to gay-themed networks may not be another “gay network” at all.

Bravo, for example, launched the first gay dating reality show, “Boy Meets Boy,” the groundbreaking “Queer Eye,” “Gay Weddings” and-last week-the male model reality show “Manhunt.” In its “Manhunt” review, Entertainment Weekly wrote, “It’s official: Bravo is now the gayest television network of all time.”

Bravo President Lauren Zalaznick acknowledged the gay audience is desired, but only as a subset of a larger arts-oriented viewership.

“It’s really quite a different mandate between gay programming and programming that includes a lot of different people, including gay people,” she said. “To be successful, Logo and the other two don’t need as many people to watch them as we do.”

That raises the question of whether even one gay-themed network can generate enough viewers to sustain itself. Networks like BET, WE and Spike TV all target larger niches than the gay community, yet haven’t generated stand-out ratings.

Logo President Brian Graden argued that comparisons to other niche networks are not valid. “If you’re Lifetime or WE and targeting women, 85 percent of other networks also have good programming for women,” Mr. Graden said. “But I cannot say the same about gay programming.”

On the surface, Logo would seem to be the gay-themed channel with the most advantages. Viacom certainly knows the art of launching, programming and promoting new cable networks and has enviable access to popular talent.

But with its basic cable status and enormous corporate parent, Logo’s logo might as well be a bull’s-eye since insiders agree the channel will be a target of conservative controversy.

“The great thing about working at MTV Networks is they stand up for what is right,” said MTV veteran Mr. Graden, who in addition to adding Logo to his plate was promoted this month to president, entertainment, MTV Networks Music Group. “Backlash is not something we spend a lot of time and energy on. We’re trying to get it right for the audience.”

In fact, Mr. Graden said talks with regional distributors are going well, and not just in urban areas.

“The number of gay people in rural areas are incredibly significant,” Mr. Graden said. “You can argue that the demand there is even greater than the demand in urban areas since they don’t have access to as much diverse entertainment.”

Over at Here! TV, meanwhile, is a company that’s so different from Logo it’s almost difficult to call it a competitor. Logo is basic cable, Here! TV is premium. Logo wants all-ages viewership, Here! TV aims for adults.

The network came about as a venue for distributing gay-themed movies produced by Regent Entertainment. Boasting “the largest library of gay programming” in the country, including a list of titles acquired from MGM, Here! TV used video-on-demand to establish its brand before branching into full-time carriage. Thus far, the network, which charges about $8 a month, has found distribution on DirecTV, Dish and iN Demand.

Andrew Tow, Here! TV president and chief operating officer, said his distribution model provides an advantage over Logo and Q.

“Unlike the others, we are fully capable of delivering our service via PPV, VOD or as a monthly subscription channel,” he said. “We’re focusing on what we know the operators’ needs are. We are not a cost center they have to be concerned about; we’re generating income.”

Another of the company’s benefits is that it’s more self-sustaining than a traditional start-up network. Until Here! TV, Regent’s biggest challenge was finding domestic distribution outlets for its programming. Establishing the network was seen as a cost-effective solution rather than a high-risk experiment.

“We’re able to produce high-quality programming because it makes us money instead of costs us money,” Mr. Tow said. “It’s all subsidized by sales to international territories and through other windows.”

Though Logo and Here! TV could be considered underdogs to a degree, insiders consider the real underdog in the group Q Television Network, a $7 per month premium service that launched last month on RCN in a handful of major markets.

The Palm Springs-based company boasts programs such as a gay travel show, “Q On the Move,” and a chat show called “Women on Women.”

Rene Schenk, the chief financial officer of the network, said he is not worried by the competition. The fact that the powerful Viacom corporation has entered the fray with Logo has “opened several doors that had been closed to us,” Mr. Schenk said. “We were unable to talk to some of the major cable operators. Their ears are now open.”

Matt Farber, creator of Logo, agrees. “The fact that there are other networks starting validates the importance of this market and the glaring absence of a 24/7 home for gay Americans on the dial,” he said.

Mr. Farber said Viacom originally developed Logo as a premium service in conjunction with Showtime, but became convinced a basic cable model was the best route. “The question was how many gays and les
bians would be willing to self-identify and pay for the service,” he said.

Ms. Garry predicts that at least initially, none of the gay-themed networks will have trouble finding an audience. Ms. Garry predicts gay-themed networks will have no trouble finding an audience.

“The historical and groundbreaking element of the gay community being served by cable television in this way will draw people to a channel,” she said. “It will be a challenge to the programmers to deliver content that keeps them there.”