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Fox Family Upbeat Despite Slow Start

Nearly four months after its relaunch, Fox Family Channel
is still facing an uphill battle trying to attract kids to its new program lineup, pacing
way behind the projections that it made to advertisers.

Network officials claimed that except for the poor
performance of their preschool block, they were generally pleased with their progress to
date. The Family Channel relaunched Aug. 15 as Fox Family and, in doing so, it virtually
scrapped all of the network's old programming, except for evangelist and former Family
owner Pat Robertson's The 700 Club.

"That this company has revamped a network in 73
million homes is an amazing accomplishment," Fox Family president Rich Cronin said.

The relaunched network's biggest achievement has been its
success changing its audience composition, attracting a much younger crowd with its
infusion of new programming.

"And the response from cable operators has been
overwhelmingly positive," Cronin said. "Our affiliates are happy that we have a
strategy of going original, rather than getting into bidding wars for off-network

But while Fox Family has succeeded in bringing in much
younger viewers than its old incarnation, The Family Channel, it hasn't been drawing
enough of them. It's underdelivering kids and, therefore, missing its guarantees to
Madison Avenue.

"They were too aggressive in their sales
posture," said Julie Friedlander, director of national-broadcast negotiations at
Ogilvy & Mather Worldwide.

Fox Family's rivals, Nickelodeon and Cartoon Network, said
the repositioned network hasn't hurt them. In fact, they have scored some solid successes
with children during the past few months. Nick's further expansion of kids' shows into
primetime, the "Nickel-O-Zone," has increased ratings 31 percent for that slot
since Aug. 31.

And continuing on its ratings roll, Cartoon's Nov. 18 debut
of its new animated show, The Powerpuff Girls,earned a 2.1 household rating
and a 5.3 for kids two through 11, or more than 1 million kids. That's a record for a
premiere of a Cartoon original.

"The real interesting lesson in Fox Family Channel is
that in the fragmented television world -- particularly kids -- having distribution isn't
the only answer," Cartoon president Betty Cohen said. "You have to have
programming, promotion and a clear brand image."

This spring, during the upfront before its relaunch, Fox
Family officials guaranteed advertisers a 1.0 national rating for kids two through 11. But
the channel has only been pulling a 0.3 national rating for daytime for that age group,
according to Nielsen Media Research.

This means that Fox Family will have to issue
"make-goods" to kids' sponsors -- even to advertisers that didn't buy into Fox
Family's 1.0 guarantee, and that negotiated it down to a 0.5 or a 0.6 during the upfront
-- sources said. Fox Family will also have to shell out make-goods for some adult

Cronin is playing down the issue.

"We are falling short of the guarantee for kids,"
he said. "Ad sales were very aggressive. And we have a slight shortfall in the
guarantee for adults."

But Cronin added that Fox Family has the inventory to issue
any make-goods that are necessary. And he stressed that Fox Family patiently realizes that
"it takes a while to build an audience."

Others called Fox Family "a work in progress,"
agreeing with Cronin's assessment that doing a network relaunch isn't an overnight job.

"It's had a slow start," said Bob Igiel, director
of U.S. broadcasting at The Media Edge. "Repositioning a cable network is not a
short-term project. You need to get the word out and tell people."

Some cable operators are still taking a wait-and-see
attitude about Fox Family.

"The reviews are mixed," said Jerry McKenna, vice
president of strategic marketing for Cable One. "At a few systems, the feedback has
been a bit of a disappointment. But whenever you make a change, there will be some people
who will be disappointed. The jury is out on whether the programming is solid enough to
build a new base."

John Murawski, director of product management for The
Lenfest Group, added, "They've certainly lived up to the billing of 'family
programming with attitude.'"

Fox Kids Worldwide -- a joint venture of News Corp. and
Saban Entertainment -- forked over $1.9 billion last year for The Family Channel in order
to turn it into a cable outlet for kids during the day and a venue for young families at

They acquired Family from International Family
Entertainment Inc., which, under the Robertson family, programmed the channel with
off-network fare such as Hawaii Five-O, which appealed to viewers 50 and older.

Fox Family has succeeded in drawing a younger audience,
which is attractive to advertisers, while keeping some of its former viewers.

This past July, before the relaunch, 59 percent of Family's
total-day audience (excluding paid programming) was 50 and older, with kids two through 11
just 4 percent. From the relaunch through Nov. 8, the percent of audience 50 and older
dropped to 24 percent, while kids two through 11 soared 29 percent.

While Fox Family has certainly increased its kids' audience
-- in raw numbers and when compared with its established competitors -- the gains don't
appear quite so impressive.

From its launch through Nov. 15, Fox Family averaged a 0.2
total-day national rating for kids two through 11, while Nick averaged a 2.0, according to
Nielsen. For its kids' daytime block, Fox Family averaged a 0.3 national rating, compared
with Nick's 2.5.

In the fourth quarter alone, to date, from 7 a.m. to noon,
Fox Family is drawing 117,000 kids two through 11, compared with Cartoon's 482,000, Disney
Channel's 478,000 and Nick's 1.1 million, according to Nielsen.

"Fox Family says they'll come close to making us whole
[with make-goods] in the fourth quarter for kids," said Gary Carr, senior vice
president and group director of national broadcast at Ammirati Purris Lintas, adding that
the network may not be able to do that for adults.

As for Fox Family and kids, Carr said, "Yeah, they're
a disappointment. I knew that they weren't going to set the world on fire. It takes a long
time to build a network. If they don't do better, then you don't buy them again."

For her part, Friedlander said she wasn't surprised at Fox
Family's poor kids' showing, because "we never thought that they'd do the high

She added, "We had lower estimates. They're going
against three mature channels. It's not easy to enter the arena at this stage."

Cronin conceded that Fox Family's 11 a.m. to 1 p.m.
preschool block "has been a disappointment," and that its 0.2 rating is dragging
down the rest of the network's kids' numbers. The block includes some shows that Fox
Family invested heavily in, he said, such as The All New Captain Kangaroo and
Shining Time Station

The problem is that the preschool block follows The 700
,which is interrupting the network's daytime children's programming.

"We can't count on any audience flow after The 700
," Cronin said.

Margaret Loesch, new president of Odyssey Channel and
former head of Fox Kids, recently described The 700 Club as "an island"
in Fox Family's kids' lineup. Fox Family is trying to do more promotion for the preschool
shows to alleviate the problem, Cronin said.

Nonetheless, officials at Nick and Cartoon argued that
kids, as well as adults, will seek out good programming wherever it airs.

"I'm a firm believer of the ability of the audience to
make choices based on quality programming," Nick general manager Cyma Zarghami said.
"The audience is discriminating."

Nick's 8 p.m. to 9 p.m. kids' block is averaging a 4.6
national rating for kids two through 11, a 31 percent increase compared with a year ago.
Its new shows -- The Wild Thornberrys and Cousin Skeeter -- are especially
shining, she added.

Nick has seen some weakening in its total-day ratings
during the third quarter, slipping 6 percent to a 1.6, according to Nielsen. Zarghami
didn't attribute that softness in ratings to Fox Family, but more to the increased
distribution of both Disney Channel, which is converting to a basic, and Cartoon.

"There's a lot more programming than a year ago,"
she said. "It's a victory that we were about flat [in the third quarter]."

Cartoon is building its primetime schedule by adding
different original shows at 8 p.m., sandwiched between Dexter's Laboratory and
Cow and Chicken

Unlike Fox Family, Cartoon has a lab to test cartoons, by
first doing shorts and then developing them into animated series, which was the case with The
Powerpuff Girls

"Piece by piece, we're building up our fringe and
primetime," Cohen said.

In the third quarter, Cartoon's ratings continued to rise.
It did a 1.1 household rating total day, up 22 percent, and a 1.6 in primetime, up 23