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Emerging Cable Nets: It’s Not Easy Being Green

Apr 3, 2006  •  Post A Comment

Last week Gospel Music Channel announced a carriage deal with Comcast that allows the Christian-themed music channel to pursue carriage deals directly with Comcast markets. The agreement is significant for the network because a deal with Comcast is one of the virtual necessities for any emerging network.

It isn’t easy these days to be a new network. Without a big operator, backing of a media company with deep pockets and big sister networks, or a killer idea, new networks face a tough road.

That’s because the heyday of digital carriage is over. Back in the late 1990s, cable operators actively sought new networks to fill their suddenly expanded digital lineups. Now those channel cards are full and operators have relegated most new networks to video-on-demand. They simply don’t have the space. When consumers watch only a handful of channels anyway, most operators are reluctant to free up precious bandwidth for a new, unproven concept when they can use that real estate for VOD, interactive TV or other new services.

However, a handful of networks are still opting for the old-fashioned route, offering up full-bore 24/7 channels rather than relegating their content to the slice-and-dice world of VOD. Networks such as Gospel Music Channel, CoLours TV, ImaginAsian, ESPNU, Tennis Channel and Africa Channel are among the crop of networks looking to build a linear television business. Some of those channels-notably Gospel, ESPNU and Tennis-are a bit ahead of the pack.

Here’s a look at how these networks are wrestling with the daunting task of gaining carriage in today’s tough economic climate.



Gospel Music Channel

The network’s recent Comcast pact comes on the heels of existing launches in Comcast systems in Atlanta, Nashville and Savannah, Ga. The network is now available in 77 markets reaching nearly 6 million homes.

Gospel secured a similar agreement with Charter earlier this year, and has deals with Cox, Verizon and 25 independents. That’s a hearty base for the network, which delivers gospel and Christian music videos as well as artist biographies, specials and concerts. The channel launched in 2004. To date, it has enlisted 11 ad partners in its camp, including Ford, Lincoln-Mercury, Reckitt Benckiser, Geico and Sony Pictures.

The network is usually housed on the basic digital tier, near music and family channels, said Charles Humbard, president and CEO. Gospel opted for a linear model rather than a multiplatform, pick-and-choose format because the fan base is large enough, he said, citing research from Arbitron that puts the gospel music fan base at 80 million in the United States. “The audience for gospel and Christian music is underserved,” he said.

Mr. Humbard quoted figures from the Recording Industry Association of America that sales of recorded gospel music hit $1 billion in 2005. He expects his network to reach 16 million homes by year-end.

He still pegs 30 million to 35 million as the benchmark for when a network can become profitable on a yearly basis. However, he believes Gospel Music Channel could reach profitability on lower distribution because of the low cost structure for programming and because he expects strong viewership.

“We will have pretty high viewership numbers. … Our cost model is different than a movie channel,” he said. The fan base is committed too. He said the network receives 3,000 to 5,000 calls or e-mails per week from consumers requesting the channel.



Africa Channel

The newly launched Africa Channel is currently carried on Cox systems in New Orleans and Baton Rouge, La., as well as on Comcast in Atlanta, reaching about 500,000 homes. The network plans to be in 1 million homes by the end of this quarter.

“It’s obviously a very big challenge for new networks to gain distribution in this incredibly dynamic environment,” said Jacob Arback, president and co-founder of the network.

Programming is the most important factor, and without good content a network simply can’t get off the ground. Beyond that, Africa Channel has focused on community involvement as a way to rally support. For instance, when the network launched in Atlanta on Comcast, it visited with student groups at Emory University and Georgia State University.

The network has also aligned with African and Pan-African film festivals around the country and shows cross-channel spots before the films, said Bob Reid, executive VP and network general manager. “We are not just another network or programmer who is going to be in their lineup without creating any business or financial impact. We demonstrate that we will be actively engaged, build awareness of the network and help the local system,” he said. That process could include packaging trips to Africa for consumers who sign up to upgrade to digital, for instance.

“We reach many hard-to-reach constituencies,” Mr. Arback added.



ImaginAsian

The Asian-themed network reaches about 4.6 million homes now following a 2004 launch, including homes served by Comcast in San Francisco and Time Warner in Los Angeles and New York. “Urban markets are the low-hanging fruit,” said Anil Srivatsa, executive VP of distribution and new business development for ImaginAsian.

“We are a niche network that targets or caters to Asiaphiles,” he said.

Much of the content is acquired, which lowers the cost model for the network, Mr. Srivatsa said. He expects to reach 20 million homes by 2007. The network also offers VOD programming and home videos.

The competitive differentiator for the network is that it helps cable operators meet their need for ethnic programming. “It’s bandwidth-friendly because it targets all Asians in one channel,” Mr. Srivatsa said.



CoLours TV

The multicultural network has faced an uphill battle since launching five years ago. CoLours TV has found its way into 12 million homes, primarily through a deal with EchoStar, and also counts some Comcast, Adelphia and Insight distribution.

“I don’t have Viacom or Disney behind me,” said Tracy Jenkins Winchester, president and CEO of the network. “It’s been a struggle.”

The network targets African Americans, Asians and Latinos with movies and entertainment programming.

While operators are pushing networks to transition to VOD, Ms. Winchester said she is reluctant. “We don’t want to be a slice-and-dice network.” she said. “What’s the point of having a network if you can get all the programming on-demand anytime you want? You don’t get a chance to provide the same full service as CNN or BET, for instance.”



ESPNU

The newest ESPN-backed network launched 13 months ago with a slate of college sports programming including football, basketball and the red-hot sport of lacrosse. Now the network has marched into 8 million homes through deals with DirecTV, EchoStar, Adelphia, Mediacom, Insight and others.

ESPNU benefits from being part of the Disney family with exposure and leverage. “That Disney and ESPN merged their affiliate groups was for the power of all the products offered under that banner. There is no question it’s a huge advantage, but we also like to think we are offering distributors some really compelling products to help drive their business,” said Burke Magnus, VP and general manager of ESPNU.

Mr. Magnus worked at ESPN when ESPN2 launched more than a decade ago. He has watched the landscape change dramatically for new networks in that time. Still, he believes EPSNU targets an underserved niche and will make its way into many more millions of homes. “ESPNU has as good a chance as anything we have launched since ESPN2 to be a powerhouse, fully distributed network,” he said.

The network televised 477 live events in 2005, including 192 hours of NCAA championship sporting events. It covers 19 college sports.



Tennis Channel

The network launched less than three years ago and counts deals now with eight of the top 10 cable operators, reachi
ng 9 million homes. Tennis Channel just signed a deal with EchoStar in February.

The programming includes live sports coverage and lifestyle programming, including more than 80 percent of the top tennis tournaments, said Ken Solomon, CEO of the network. Tennis Channel has also developed content for the Web, broadband, VOD and wireless to the tune of more than 100 original short-form episodes.