Champagne Taste Doomed Tiny Net

Jun 19, 2006  •  Post A Comment

Despite the death of Q Television Network last month, the notion of a thriving business built on programming for lesbian, gay, bisexual and transgender viewers remains alive and well, TV insiders said.

Q, one of three television services targeting LGBT viewers to launch in recent years, terminated its signal May 25, ending Triangle Multi-Media’s two-year TV experiment.

Executives at the two other gay-themed cable services in the marketplace and cable operators alike remained unfazed by the demise of Burbank-based QTN.

Still, many television executives are now looking at Q’s story as a cautionary tale of how elusive winning business models for new niche programming services can be, and how quickly faulty financial setups can flame out.

Q competitors Logo and here! TV continue to plug along. And at least one executive of a multiple system operator said the failure of QTN does not mean the marketplace has soured on gay-themed cable channels.

Cox Communications, which carried Q on a handful of its systems, including its operations in Syracuse, N.Y., is willing to run similar services, said David Grabert, director of media relations for Cox Communications.

“We continue to be open to content that continues to speak to niche audiences,” Mr. Grabert said.

Available in only 3 million households, Q was always the smallest of the three services, yet had the most ambitious programming schedule. QTN executives sold their network as a provider of more than 20 hours of live programming per week, a challenge for any cable operator, especially a fledgling service. Q, a name that likely attracted viewers who were familiar with the term as a moniker for gay self-identification, arguably lived beyond its means from the start.

The Viacom-owned, ad-supported network Logo has about 20 million subscribers.

Logo has filled its schedule with library content and reality and original scripted series.

Here! TV, a service available in 50 million households, relies on a number of distribution platforms, including a linear premium cable channel, video-on-demand, subscriber VOD and pay-per-view. Here! relies heavily on the film library of its sister company Regent Entertainment.

Indeed, the problem with Q wasn’t the programming but the way it set up its finances, Paul Colichman, founder and CEO of here! TV, said.

“If you assigned that business plan to any niche, it wouldn’t work,” Mr. Colichman said, noting that he was surprised to see how many trade publication ads Q bought during its short run, when his company was using its money to secure programming.

The only time Q’s rise and fall hurt here! TV was in the early days, when both networks were on the drawing board and Q sold a plan to cable operators that it couldn’t deliver, he said.

“They were promising the sun, moon and stars,” Mr. Colichman said. “We could afford one star, but we would actually deliver on one star.”

Lisa Sherman, senior VP and general manager of Logo, said Q simply had a business model and programming strategy that was different from its competitors. As with any new TV ventures, some succeed while others fail, she said.

“That’s show business, not gay business,” Ms. Sherman said.

The brainchild of Palm Springs businessman Frank Olsen, QTN began offering programming in November 2004 as an outgrowth of Triangle Multi-Media, a penny stock favored by small investors willing to take big risks.

The network televised its first live show in April 2005, just as it was announcing its first carriage agreements and signing talent.

Production initially was located in the Dallas area. The company moved to Burbank in summer 2005, when it expanded its staff and production schedule.

Q kept a high profile in the gay community, sponsoring numerous events.

But despite Mr. Olsen’s optimistic reports in company press releases about the financial buoyancy of the company through the end of 2005, Q started having trouble making its payroll in late December and early January. By early February 2006, the network started laying off staff and had received complaints from several vendors about unpaid bills.

In March Mr. Olsen and his executive team left the company; they were replaced by investor Lloyd Fan. In April Mr. Fan announced Triangle was unable to deliver audited financial statements due to incomplete accounting records, but pleaded with investors to be patient as he attempted a financial turnaround to get the company out of what turned out to be crippling debt.

In May, Mr. Fan shut the network down after revealing the company owed $7 million to creditors and $600,000 to former employees.

“The financial challenges that the network faced proved too difficult and I was simply unable to turn around the network,” he said in a release.