Read Cox’s Lips: No New Nets…

Don’t expect Cox to add many linear networks to its digital lineup in the near future. That’s because consumers’ appetites already have been sated for that kind of programming, says Bob Wilson, Cox’s SVP, programming. Cox believes that it should look to add value as opposed to add more channels to current digital offerings. Part of Cox’s decision-making is reacting to the wishes of some regulators, who are hammering away at MSOs to give consumers more choice in what they want (as in a la carte), so the idea of adding more networks to digital tiers holds little appeal, says Wilson. Instead of launching new networks, Cox plans to emphasize video-on-demand to make sure its programming is meeting its customers’ needs. This doesn’t mean Cox has put a moratorium on adding digital channels to its lineups. The MSO recently agreed to carry Fox’s Fuel Network, and picked up Starz Kids a month ago. But the notion of adding networks simply for the purpose of fattening digital tiers has gone out of vogue, Wilson says. "We built up expanded basic by adding channel after channel, and consumers can’t opt out of that," Wilson says. "We didn’t want to do that with digital." Cox has been dipping its toes into VOD; it launched Entertainment On Demand—a predominately feature film-based on-demand product—in six markets. Cox digital cable customers are charged $3.95 per movie when using Entertainment On Demand, while special events cost more. The MSO isn’t fond of the free VOD model being pushed by other cable operators—Wilson believes customers will be willing to pay for the service. Cox wants to test a subscription VOD model for ad-supported digital networks that would make certain programming available anytime for a monthly fee. Customers could get all VOD programming available from specific networks such as Nickelodeon or Disney Channel for $1.95 a month. The VOD model is an obvious fit for non-ad-supported networks like HBO or Turner Classic Movies. But ad-supported networks face a conundrum: They need to make sure they don’t sacrifice ad revenue for the sake of a new delivery mechanism. They don’t want to lose traction with viewers who’ve watched the core networks. Neither does Cox. Branded VOD programming would enable Cox to promote content without sacrificing the networks’ core programming, which should make the concept more attractive to networks, Wilson says. Cox is looking to the networks to create unique VOD programming, and Wilson says he’s willing to pay for it. While the MSO isn’t interested in shelling out extra dough for content that’s already available to customers via linear networks, repurposed programming still has a place in the VOD model. In addition to its desire to create an SVOD model for ad-supported networks, Cox is considering offering up an amalgamation of the best programming available on the entire digital network lineup for a monthly fee. Still, Wilson admits that several hurdles exist—including copyright issues and the potential of lost advertising revenue—that must be dealt with before such a product is available. "We need to develop alternative ways to sell advertising with Entertainment On Demand," he says. "We’re highly focused on advertising-based VOD. We can establish direct relationships with advertisers and create new value." Hispanic Tier Under Wraps Cox is reexamining its current mix of programming and tweaking some tiers to make them more attractive to customers. First up: a Spanish-language digital tier that Cox is revamping, says David Pugliese, VP, product marketing and management. "We’ve acknowledged that we’ve not had the best Latin programming package," Pugliese says. "We are in the process of repositioning that tier, and we’re getting ready to relaunch it in some of our markets." The as-yet-unnamed Hispanic tier will launch in the third quarter. Customers can expect to see more "culturally relevant" programming than has been presented in the past, a Cox spokesman says. For instance, Cox is lining up more programming from Mexico, the country of origin for many of its customers. Cox also is seeking shorter-term programming contracts so it can be more flexible in offering customers what they want as tastes change. Pugliese promises the Hispanic tier will be backed up with plenty of marketing muscle, a change in philosophy for the MSO, which tends to focus on selling bundled packages of services rather than specific programming packages. Marketing the Hispanic package makes sense, given Cox’s heavily Hispanic markets, which include San Diego, Phoenix, Tucson and Santa Barbara, says Pugliese. Cox hired Dallas-based Cultura Advertising as the company’s Hispanic agency of record. The ad agency will work with the MSO to build awareness of and demand for its digital cable, digital telephone and high-speed Internet services among Hispanic populations. "We know EchoStar has a lot of ethnic programming, and we want to make sure we’re filling our customers’ needs," Wilson says. "New tiers must be highly specialized and have to be able to generate revenue other than a monthly fee to be effective. We don’t want to erode our margins any further."