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Fox Cable Tests the VOD Waters

Some major cable programmers have been reluctant to enter the video-on-demand waters, but not Fox Cable Networks Group. The programmer debuted two acclaimed dramas — FX's The Shield and Fox's 24— on the VOD component of Cablevision Systems Corp.'s iO: Interactive Optimum platform last year. And Fox is plowing ahead with a research-and-development effort that it believes should pay off in the long run.

Last summer, first-run network episodes of The Shield
and 24
ran on Cablevision's VOD platform for free. In 2003, new installments of both shows are available for $1.95 per episode or $19.95 for the entire season.

But Fox Cable also is exploring free on-demand and subscription VOD packages with operators.

"Our view is that there should be a range of content," said Fox Cable executive vice president of affiliate sales and marketing Lindsay Gardner. That range encompasses free on-demand, pay-per-view, VOD and SVOD offerings.

"All three consumer propositions have a place, at least now, while distributors and programmers are working together to answer VOD questions," Gardner said.

Last year's free airings of 24
and The Shield
brought Fox Cable "enormous benefit," said Gardner.

"With both shows, each secured $1 million worth of promotion in the New York DMA," including cross-channel spots and guide ads.

Ratings for both shows rose modestly in the New York DMA, where all of Cablevision's systems operate. Plus, Fox Cable gained promotional exposure that didn't cost money and "strengthened our relationship with Cablevision."

Hits with a bullet

Fox sent digital master tapes of each episode to Cablevision, without commercials. In all, 13 episodes of The Shield
and two dozen episodes of 24
were made available.

"The Shield
and 24
were the No. 1 and [No.] 2 most watched VOD shows on the entire Cablevision platform," Gardner said. Some 25 percent of the people who watch any one episode watch the entire season of that series, he added.

It's the first and only case of network TV shows airing on VOD immediately after their broadcast run.

What was the reaction from Peter Chernin, the News Corp. president and chief operating officer who announced the landmark deal at the National Show last year?

"He's delighted," Gardner said. "He recognizes that content companies must understand how these new technologies work, must experiment and must show a dose of humility. He's prepared to put our Fox content out there to learn and [to] influence the development of VOD."

All episodes of 24, now more than halfway through its current network season, and The Shield, with six or so episodes under its belt this year, are available on the VOD platform.

Commercial free

The programs still don't contain ads, as much for logistical as strategic reasons.

"It's easier to deliver digital masters without them," Gardner explained. "There is a timeliness to these commercials, and that adds a degree of complexity."

Some programmers might look at Fox's gambit and say putting fresh product on VOD before reruns and other windows, like syndication, devalues the product. Fox isn't ready to jump to that conclusion without testing.

"I think it has a positive impact," Gardner said. "The more viewers are aware of our shows, the more likely they'll be to tune in at later date."

Gardner provides his own example. "I've seen every Seinfeld
episode there is," he said, but that doesn't stop him from watching repeats in syndication.

"Today, only 4 million to 5 million homes have VOD capability," Gardner said. "There is heat and publicity and awareness being exhibited on these VOD platforms," which provide a promotional exposure beyond that base.

And this time around with Cablevision, Fox will get paid.

Not to choose favorites among platforms, Fox has released both shows on sell-through DVD, further clouding the market. That's another move other programmers might view as one that could potentially cannibalize the TV audience.

"I don't believe it's an either-or situation," said Gardner, who notes that DVD and VOD availability should help The Shield's syndication value. "Program owners like this, because they see more evidence there is life in their products."

There might come a day where product migrates to the VOD platform after a run on syndication, Gardner added.

'Idol' on VOD?

So what's next? Gardner said cable operators have approached Fox about carrying American Idol
on VOD, right after the show's initial network broadcasts.

"What we've learned from our VOD trials is that the content that really moves people is the big, high production, compelling show with a big budget and big rating," he said.

But "niche content has a place," he added, as evidenced by Comcast's placement of content from Fox Cable's Speed Channel and National Geographic Channel on its free on-demand service.

Gardner said 25 percent of Comcast's sports VOD "views" are of Speed Channel content, adding that "National Geo is very strong."

The Fox Sports Net family of regional services can also play a role, he noted. "We'll do some stuff [with sports] this year," he said.

Gardner is in discussions with operators about carrying regional professional games, or condensed versions of pro and college games on VOD, on a delayed basis. Talks continue with operators, the pro sports leagues and college athletic conferences, he said, and Fox is confident some tests will begin this year.

"It's an important area for us as distributors," said Gardner of VOD, adding that the reward for early experimentation is early knowledge. "We know so much more today than we knew nine months ago."