Motor Trend Idea: Something for All

Apr 24, 2006  •  Post A Comment

Mike Ruggiero and Jon Findley could be the driving force behind a solution to some of the television industry’s most daunting challenges.

Mr. Ruggiero, a 28-year cable and marketing veteran, and Mr. Findley, who has 35 years in TV broadcasting, run Multicast Networks Group, a Carmel, Ind.-based start-up that provides digital broadcast services to local television stations. Last week MNG announced a partnership with the publisher of car-enthusiast magazine Motor Trend to introduce a broadcast channel based on the magazine and to be carried by local television stations on a slice of their digital broadcast spectrum.

If the channel is successful, it could bring automotive advertisers-local TV stations’ biggest source of advertising revenue-back into the fold after a few years of reduced spending. It could also offer local stations a viable use of their digital spectrum at a time when many broadcasters are scrambling to find ways to recoup the federally mandated investment to become digital broadcasters.

Perhaps even more remarkable, the channel’s ability to get picked up by cable operators could offer other startup channels another means by which to obtain cable carriage.

“This can benefit everyone in the broadcast value chain,” said Mr. Findley, who serves as MNG’s president and chief operating officer (Mr. Ruggiero is its chairman). “You can tap into excess bandwidth capacity to help defray the cost of digital upgrades.

“Advertisers win because it provides them with more options,” he said. “Cable operators win because they are able to cross-promote [the channel] with digital cable. Consumers win by deriving the benefit of the channel at no extra cost to them.”

Set to launch early next year, Motor Trend TV is expected to follow the magazine’s lead of covering auto industry news, along with road tests, first drives of new models and other related topics. Working in conjunction with Motor Trend publisher Primedia, the channel is expected to broadcast around the clock, and feature 80 percent original programming.

MNG will pitch the channel to local stations, which won’t have to pay to carry it. Where everyone involved will make money is from advertisers, who MNG predicts will flock to the channel.

The concept, which the MNG duo characterized as in the very early stages of development, has not yet been pitched to any potential auto-related advertisers.

No stations have signed up for the service, though an MNG spokesman said “numerous discussions” are taking place. Further, no cable operators have agreed to carry the channel. However, MNG plans to announce within the next few weeks the planned launch of two more channels following the model.

Long Road

The deal to launch Motor Trend TV is the culmination of an 18-month effort that began when Mr. Ruggiero and Mr. Findley founded MNG. Mr. Ruggiero worked for years as a consultant, helping to launch such cable networks as HGTV and Court TV. Mr. Findley’s experience was in programming and operations management at local TV stations and VH1. Initially looking for a strategy that would enable niche cable networks to get cable carriage, the two men shifted MNG’s focus to broadcasters, with particular attention to channels that had broad appeal to consumers. At the same time, Primedia was winding down its production of a Motor Trend show that was carried on the Speed Channel and was looking for new opportunities in television.

Mr. Findley said he placed a cold call to the magazine, and after several conversations, both parties eventually agreed to work on launching Motor Trend TV.

Whether a strategy like this has any traction remains to be seen. While MNG is providing the infrastructure needed to launch and run the channel, it’s unclear how receptive local stations-or advertisers-will ultimately be.

“We’re in this time of transition in which stations are asking how is that additional spectrum going to be used,” said Bill Carroll, VP and director of programming at Katz Media. “Are stations looking at potential opportunities? Yes. There’s no question that automotive is a key category. So then the question becomes, if this [channel] exists, does it automatically attract the audience? Is it something that is quantifiable enough that those in the automotive arena would be willing to put advertising against that? At this point, in the initial stages, there is no way of quantifying viewership.”

Another risk: carriage on a cable system. Unlike the rules applying to analog or digital broadcast signals, current regulations do not require a cable operator to carry a local station’s multicast feeds, which means the station’s fate rests in the hands of the cable operators, which are growing ever more picky about what channels they allow on their systems. Cable operators are definitely carrying multicast signals, but they do so on a case-by-case basis.

Mr. Findley argued that a channel like Motor Trend TV could be an appealing proposition to a cable operator looking to drive more subscribers to digital cable.

Then there’s the issue of whether niche programming is appropriate for digital broadcast. While NBC Universal has had success with its Weather Plus digital channel, it is unclear if even an interest as popular as automobiles is enough to guarantee similar results for a channel dedicated to the topic.

“The plan fits the mold of affinity audience targeting, in this case with a prominent brand of Motor Trend, but the strategy fits the mold of sliver-casting, a concept more likely to succeed across the Web rather than over broadcast airways,” said Lee Westerfield, a broadcasting industry analyst at Harris Nesbitt Gerard.

Mr. Westerfield noted that the cost of broadcasting over a digital signal will far outpace the cost of making the same content available over the Internet, which should be something local stations consider when pondering what sort of specialized video they want to broadcast over their digital spectrum.

Jacqueline Blum, president of Primedia Enterprises, the division of Primedia that licenses its content, appreciates the point, but noted that widespread, broadband distribution of video isn’t quite ready for prime time.

“Consumers sit in the living room and turn on the TV,” she said. “That might change in the future, but that future is further down the road.”