Cable Operators

Sharper Images, Softer Leverage

9/23/2005 8:00 PM Eastern

The Jan. 16 launch of MTV’s new HDTV channel will serve as a good test of how effectively the media giant can sell a new cable channel without using its stable of CBS stations in major markets as distribution leverage with cable and satellite providers.

MTV Networks senior vice president of affiliate marketing Jessica Heacock says the company won’t use agreements with distributors to carry local CBS station signals — known as retransmission consent — to drive distribution for MHD, its new HD channel.

Heacock points to Viacom Inc.’s upcoming spin-off of CBS Corp., which is expected to close early next year, as the reason why MTVN won’t wield retransmission consent in distribution talks for MHD.

In a number of previous agreements with cable and satellite providers, MTVN has used retransmission consent for CBS as a means to gain long-term carriage or better channel positioning for several of its services, including Spike TV, Nickelodeon, Comedy Central and Black Entertainment Television.

SOME CARRIAGE

Heacock says MTVN already has secured carriage deals for MHD, but declines to identify the distributors on board with the fledgling channel. There’s no indication so far that the country’s largest platforms plan to add MHD when it bows.

DirecTV Inc. spokesman Bob Marsocci says the direct-broadcast satellite provider won’t carry the channel at its inception, but that it plans to eventually add MHD to its HD lineup.

Time Warner Cable spokesman Keith Cocozza says his MSO hasn’t agreed to launch MHD. And Comcast Corp. spokeswoman Jenni Moyer declines to comment on whether the nation’s largest MSO would launch the channel.

MTV would be moving into a wide-open arena, as there is relatively little music HD programming available on cable or satellite today. Rainbow Media Holdings Inc.’s Rave HD platform is only available on EchoStar Communications Corp.’s Dish Network, and In Demand Networks supplies cable operators with pay-per-view concerts shot in HD. For its part, Mark Cuban’s HDNet, which counts cable and DBS affiliates, showcases enhanced concerts of established stars and musical newcomers.

MTVN executives want to take advantage of a rise in U.S. sales of HDTV sets, which are expected to grow from 10 million to 30 million during the next few years.

“It’s the 18-to-34-year-olds that are going to be buying them first,” says MTVN executive vice president Jeff Yapp, referring to the music network’s target demographic

MHD marks Viacom’s first HDTV channel for distribution on cable and satellite platforms. Nickelodeon could be the company’s next channel to launch an HD version.

“I think music lends itself to high-definition, and sports does as well. I would think Nick is probably toying with the notion now, because kids like to see every dimple and crevice. But I couldn’t tell you who is going next,” says MTVN Music Group President Van Toffler.

MHD will contain programming from MTV: Music Television, VH1 and CMT. While it will initially be a challenge for MTV to obtain HD videos, because most record companies aren’t using the format, the network will also present concerts and original programming shot in the enhanced mode.

CONCERTS AND TOP SHOWS

Regular shows on MHD will include MTV Unplugged, VH1 Storytellers, CMT Crossroads and ratings powerhouse the MTV Video Music Awards.

Toffler says MHD won’t contain any commercials at its launch, but that the channel will eventually carry advertising, although he says it would be a smaller commercial load than the linear MTV channel.

MTVN executives previewed the channel on Sept. 13 at its Times Square studio in Manhattan, with one of its VJs pressing a faux launch button in the studio. That triggered a montage of MHD clips running on a giant video billboard visible from the studio on Broadway.

MTVN has stepped up its new-media efforts this year, launching the online MTV Overdrive, which contains hundreds of music videos and segments from MTV original programs, on April 25.

While MTVN is generating more revenue from new-media sources, Toffler says the company’s linear channels remain the core driver of its business.

“I think that the TV business is still vast and will overwhelm the other businesses, but they will probably grow to be a more significant contributor to our revenue and profits as well,” Toffler adds.

September