The Carriage Seekers

Looking for distribution? It’s all in the salesmanship.

With available bandwidth all but an endangered species, MSOs say that smaller channels looking to grow and would-be networks alike stand a better chance of cozying up to affiliates not by forcing them to listen to the umpteenth idea for channel 436 but by figuring out how to help market an operator’s other wares.

And by other wares, we mean nonlinear services.

Or as Insight Communications VP of programming Melani Griffith puts it: "I’m looking for people who appreciate the fact that we have things to sell other than basic cable. That’s so 1985."

Entrepreneurs and operator execs agree the road to distribution is not for idealists — "[Start-ups] pitching analog are nonstarters," Griffith adds — but several emerging and reemerging networks ranging from the yet-to-launch VOD service Ski Channel to relaunched channels Ovation TV and Outdoor Channel are succeeding by thinking outside the digital cable box, literally.

A strong programming niche is well and good, but a start-up’s real legwork is forming marketing partnerships, creating broadband content and building that all-important commodity — the VOD library — for a fraction of the cash that big media companies spend. The days of new networks grabbing license fees for distribution based on niche alone are numbered, if not gone. And independents lack the leverage that comes with being one of several networks in the family.

"When we hear a pitch, the first question we ask ourselves is, ‘Is there value for us in adding [another] channel?’" says Matt Strauss, Comcast’s SVP, new media.

Rather, top MSOs say the biggest draw for them are networks that double as marketing partners from the get-go, driving eyeballs to their burgeoning nonlinear businesses and, in particular, video on demand.

Steve Bellamy, founder of The Tennis Channel and about-to-launch Ski Channel, says because of that he never considered pitching Ski as a linear service like Tennis.

"I don’t ever want to be a linear channel," he says. "I don’t think the economics of starting one work anymore. Ballpark, it costs $100 million or more to launch. I don’t know how you make that back in advertising if you’re in fewer than 70 million homes in today’s environment."

Ski will launch on demand in 8 million Time Warner Cable homes next year. Until then, he’ll be building a library of original content focused on skiing and other mountain sports exclusively for VOD, mobile and broadband platforms. The nonlinear environment hasn’t warded off talent either: Gold medalist Jonny Moseley has already agreed to host a show for the channel, and Bellamy says a "flurry" of programming announcements will roll out soon.

"We’re one of the few on-demand networks that is not made up of re-purposed linear programming," Bellamy adds. "Ski Channel gives you a reason to use VOD — it’s a gift to the cable community."

Linear Lingers

Still, the yearning of some for a permanent position on the dial remains high. Brad Samuels, EVP of affiliate sales for TV One, a general entertainment destination for adult African-American audiences, says that although the channel counts Comcast among its owners, the uphill battle for growth is the same for his network as it is for just-launched indies and nets with minimal distribution; he’s only recently begun to ink on-demand deals. "We’ve started to premiere episodes of certain series on VOD. It’s what operators are most interested in, in terms of generating marketing," he says.

Fledgling indie BlueHighways TV represents a rare case of grabbing linear carriage via nonlinear means. The network, dedicated to America’s roots music and lifestyle, made a deal with the VOD service provider TVN long before inking carriage or affiliate agreements.

"We launched on VOD first [because] any way you can get eyeballs, you have to," even if it’s a risk, says CEO Stan Hitchcock. There’s slim chance for ROI by creating original programming exclusively for VOD, at least in today’s environment as the ad market figures out a system to handle on-demand sales. The network already produces a library of original content that ranges from documentary series to music specials, and has established a brand that’s known to fans of Americana. Besides the VOD content, BlueHighways TV has raised its image as a radio station partner and a sponsor of music events. With the TVN deal, BHTV’s content reaches 3 million on-demand homes. Bresnan Communications launched BlueHighways as a linear channel in March in fewer than 1 million homes; it also was the first MSO to offer BlueHighways via VOD.

"What we look for is flexibility from new networks in terms of where we carry content," Insight’s Griffith says. "While we’ll never guarantee programming that launches on demand will eventually get linear carriage, the most exciting things we’ve done lately have been in the nonlinear space."

ReelzChannel, which launched in September, won carriage the hard way, forgoing its license fees from cable operators and satellite systems in exchange for premium placement on the dial. Reelz provides news and information about movies from their theatrical premiere to their journey across all of the ancillary windows — including plays on other channels. Every half-hour the channel runs a "What to Watch" interstitial, directing viewers to movies that will be available via their local cable operator. Network executives add that this service was crucial to Reelz’s recent growth spurt.

"I don’t think we would be successful had we not had that idea," says Rod Perth, who until recently was president of television for Reelz, and will serve as a consultant/adviser through early September. "It’s like point of purchase at Ralph’s," the West Coast supermarket. "It’s a killer application for us and for the MSO. We help them sell movies on a local basis." That means more money for operators, who get an average two minutes air time on most basic cable channels.

A Hazy Line Separating Linear and Vod

Even having megadeals with top MSOs can’t guarantee sub growth, as the evolution of Outdoor Channel demonstrates.

The network, which has deals with most major carriers, is busily rebounding from parent Outdoor Channel Holdings’ $7.3 million loss last year. The victim of being crowded out by big media-owned competition (including Comcast’s Versus), and hovering around the 30 million sub mark for years, Outdoor’s stepping up its non-linear game, readying HD VOD offerings and strengthening its online presence with new broadband fare. The network also has overhauled its image and expanded to include all outdoor sports (instead of solely hunting and fishing fare).

"We’re working up a full menu [of services] to get us to that next level," says Outdoor COO Tom Hornish, who noted that Outdoor was among the first cable networks to offer HD two years ago. New network CEO Roger Werner, an ESPN vet who arrived in October, is also lending his programming prowess to the fledgling cabler. His first effort is the October canine jumping reality/competition series DockDogs, which comes from producers Fischer Productions, whose clients include ESPN.

For arts-centric Ovation TV (like Reelz, a Hubbard-owned venture), rebirth occurs as chief rivals A&E and Bravo have abandoned "arts" programming in favor of broad reality series. The decade-old network relaunched in late June in 15 million homes under a new management team, focus and name via a deal with DirecTV. This time, COO Ron Garfield says, the network’s inside track is "the local angle."

In addition to broadening the definition of art to include mainstream and pop culture fare — original American Revolutionaries profiled figures spanning from Jackson Pollock to Kurt Cobain — Ovation TV is in partnerships with arts groups and cultural institutions in a variety of content deals and sponsorships. Among the high-profile gets are deals with the renowned Harlem School of the Arts and Los Angeles’ P.S. Arts to offer educational video from the institutions for VOD.

"For an independent network, the value proposition has to be that much stronger," Garfield says.

Ultimately, Comcast’s Strauss says, the lines between linear and nonlinear are blurring. Horror network FearNet, a collaboration between Sony, Lionsgate and the MSO, is actually listed with a channel number in Comcast homes. Instead of a live feed, however, the channel directs viewers to a menu with programming selections.

"It’s all merging together in a way that will eventually be transparent to the subscriber," Strauss says. And only the scrappy will survive.