The good news for television programmers looking to
distribute new digital channels is that cable operators are eager for fresh content to
The bad news is that digital television still reaches only
a fraction of the subscribers reached by analog networks -- roughly 5 million, compared
with 67 million for analog.
As a result, programmers with ambitions for new networks
must either adjust their programming costs and expectations to accommodate the economics
of digital cable, or try their best to gain analog carriage in order to boost subscriber
"Everyone has his own approach to the digital
universe," said Charlie Nooney, executive vice president of sales and affiliate
marketing for Disney/ABC Cable Networks.
Some relatively new channels are distributed on digital as
a secondary strategy. Toon Disney, for example, currently reaches 15 million subscribers
on analog systems, but it signed a deal with Cox Communications Inc. in October for a
mixed digital and analog rollout. Cox now has digital services available to 4 million
Disney is taking the same stance with SoapNet, a 24-hour
soap-opera channel launching in January 2000, targeting a mix of analog and digital
"For the vast majority of programming, the
opportunities are only on digital," Cox director of product development Lynne Elander
said. Disney and other programmers realize this, so they always keep an open mind when
searching for homes for their new programming.
Style, a spinoff from E! Entertainment Television focusing
on fashion topics, aims to "get distribution and get it as fast as possible," E!
Networks executive vice president of sales and distribution David Cassaro said. So far,
he's gotten 6 million subscribers for Style, mostly analog. Cassaro said Style's
distribution will primarily be analog through next year, but it will focus more on digital
starting in 2001.
Then there are the digital suites -- groups of interrelated
niche channels specifically designed for digital systems.
Discovery Communications Inc., the first programmer to
initiate this strategy, now has seven digital networks, or "digi-nets," in its
suite: Discovery Home & Leisure, Discovery Civilization, Discovery Wings, Discovery
Science, Discovery People, Discovery en Español and Discovery Kids.
DCI senior vice president of distribution and marketing
strategy Lori McFarling said the suite has a combined viewership of 11 million people. The
channels are distributed over a mix of DirecTV Inc.'s direct-broadcast satellite service,
Time Warner Cable's Athena TV and AT&T Broadband & Internet Services' Headend in
the Sky distribution platforms.
"Digital is really the lifeblood of the
industry," McFarling said. "As digital goes, so goes the business."
MTV Networks' digital suite features MTV2, which reaches 12
million homes on a mix of analog, DBS (most of the distribution) and HITS. Other networks
include MTVX (heavy metal/hard rock), MTVS (young Hispanic), VH1/Classic Rock, VH1/Country
and VH1/Soul. They reach 500,000 to 1 million subscribers via HITS.
MTVN is also building a suite of digi-nets spun off from
the Nickelodeon analog brand. Those include Noggin, the commercial-free network developed
with Children's Television Workshop, which claims 4.5 million subscribers. HITS accounts
for 2 million of those, with the rest coming from EchoStar Communications Corp.'s Dish
Network and some Comcast Corp. analog distribution.
The other two channels are Nick Games and Sports (GAS) and
Nick Too, as well as the East and West Coast feeds of Nickelodeon. GAS has negligible
distribution at this time.
Like DCI, MTVN is trying to help its cause by helping the
industry to increase the number of digital subscribers. "Any of our channels are
available for distribution in analog, [but] we're trying to take advantage of our brands
to drive distribution of digital boxes," MTVN executive vice president of affiliate
sales and marketing Nicole Browning said.
MTVN and others start with lower-cost content, much of it
recycled from existing programming properties and archives. With smaller bases than analog
channels, digital channels must watch their pocketbooks. "These channels are designed
to meet the economics of the digital marketplace," Browning said.
Fox Family Worldwide Inc. launched its digi-nets,
boyzChannel and girlzChannel, in October, and it is now in "final negotiations"
for carriage from HITS, DirecTV and the National Cable Television Cooperative, the Lenexa,
Kan.-based small-operators' consortium.
Tracy Lawrence, senior vice president and general manager
of the two channels, optimistically expects them to reach 15 million to 20 million digital
subscribers five years from now.
Other programmers that lack the financial power of MTVN,
DCI or Fox Family are hoping that their established analog channels will help their new
Do It Yourself -- which is owned by E.W. Scripps Co.,
parent of Home & Garden Television and Food Network -- launched in September, and it
is working on several deals that should be completed by year-end, according to spokeswoman
DIY will feature 40 percent original programming, with the
remainder made up of reused segments from HGTV. The programming focuses on step-by-step
"nuts-and-bolts" instructions for home remodeling and other projects,
complemented by detailed information on the channel's Web site (www.diynet.com).
Hicks said the new net would like analog distribution, but
he realizes that digital provides more opportunities. "We will push operators for
analog carriage, but being realistic, we will probably mostly end up in digital," he
Other digi-nets such as Inspirational Life Channel, an
offshoot of INSP-The Inspirational Network, also reported encouraging receptions from
Inspirational Life features 70 percent new programming,
with the rest coming from its analog sister channel, which focuses on Christian-oriented
talk shows, documentaries and other religious content. Inspirational Life currently
reaches 600,000 subscribers in 52 markets in 34 states after launching this year.
Distribution is mainly via HITS, and the network is now working on Athena distribution. It
is also pitching Comcast Corp. and Charter Communications Inc., INSP vice president of
digital programming Rob Bridges said.
Paul Kagan Associates Inc. senior analyst Derek Baine said
independents such as Inspirational Life have an uphill battle selling to operators. Most
of the digi-nets gaining distribution are spinoffs from media conglomerates. "If you
don't have the right connections at cable companies, you can be financially squeezed
upfront," Baine said.
That situation is especially true for start-up channels
trying to get into digital. While digital certainly has room for more programming,
operators are less willing to work with companies that have little to offer them besides
content. As with the bigger programming brands, operators ask for programming or financial
incentives in return for carriage rights.
Cathy Rasenberger, president of Rasenberger Media,
represents Trio and Newsworld International (NWI), which are co-owned by Canadian
Broadcasting Corp. and Power Broadcasting Inc., both based in Toronto.
The channels have been on DirecTV since 1994, and they
launched on some cable systems one year ago. Trio -- a drama, documentary and film channel
-- is on the "Select Choice" suite on DirecTV, which covers 90 percent of the
service's subscribers. NWI -- which offers global news reports from foreign services --
runs on the "Total Choice" suite, which reaches 80 percent of DirecTV's
The two services have also been carried on HITS for about
one year, and they have announced deals with MediaOne Group Inc. and the NCTC. The NCTC
offers a "potential" 11 million subscribers, Rasenberger said.
She would not give current total subscriber distribution,
but she said the channels had "pretty good" distribution on HITS. Rasenberger
added that she is also in negotiations with the industry's other large digital-cable
Cable operators, she said, have been suffering from high
churn rates for their digital services because spinoff channels from the major programming
brands offer too much rehashed content. "I think there's increasing recognition that
you need original content on digital for it to succeed," she added.
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