Making a Fresh Start

Cable-industry executives making their way to Washington, D.C., next week for The Cable Show will get an eyeful of several new networks touting their shows on the convention floor.

A closer look, though, reveals that these networks are not really new. And when viewers of Current, G4 or Documentary Channel tune in later this year, they’ll find those channels are gone, replaced by a bright, shiny set of new programs and a newly minted network brand.

Those channels, which were attracting miniscule audiences to begin with, are making way for Al Jazeera America, Esquire Network and Pivot, respectively. As with teardowns in the real-estate market, it’s part of a recent trend that’s sometimes as simple as changing a network’s name, and other times as extreme as scrapping all previous content and overhauling everything.

Last year, HDNet gave way to AXS TV, with more of a focus on live events. In 2010, Outside Television took over the tiny Resort Sports Network as a means of getting a distribution foothold, and CBS, along with Lionsgate, recently took over TV Guide Network — keeping the name for now but planning an overhaul nearly on a par with these newcomers.

News Corp. is also revamping two networks, changing Speed Channel into Fox Sports 1 — a high-profile, big-money challenger to ESPN — and Fox Soccer into the youth-oriented entertainment network FXX.

It’s a logical move — taking over an existing network provides a spot on the proverbial dial in an era when available real estate is scarce. Starting from scratch is practically impossible these days, so a big head start is valuable.

According to the latest numbers from Nielsen, G4 is in 61 million homes and Current is in nearly 50 million homes, a big edge. Pivot projects it will launch at around 40 million homes, where AXS said it is now thanks to a deal with Dish Network that added an extra 8 million homes when it switched to its new identity.

The owners of the new networks all have deep pockets, as evidenced by the $500 million Al Jazeera paid for Current. They all see tremendous potential upside if they can break through, especially with new avenues like Intel’s multichannel-video service potentially providing new license-fee sources beyond the established cable operators, telcos and satellite-TV firms.

The general rule of thumb has been that it costs at least $50 million to $100 million to start up a network and run it for five years, industry executives said — though once distribution rises, programming costs generally rise, too.

The point of buying existing channels, though, isn’t to save money versus starting a new network: there’s additional investment required to build a new, full-fl edged video brand with high-quality programming. The point is to get a running start toward the goal of full distribution.

And while there are risks that a new network could get dropped after buying another network’s affiliate deal, there’s no guarantee that a startup service will ever get mass distribution and thus wouldn’t repay that startup expense, either.

Gaining more traction in distribution will be difficult, especially as the inherited carriage deals end — particularly since most of the networks are independents. (Esquire, which did not make any executives available for interviews, is owned by NBCUniversal.)

If anything, distributors are looking to drop smaller networks that don’t earn ratings as Time Warner Cable did last year with arts and culture network Ovation. While saying he’s open to new networks, TWC chairman and CEO Glenn Britt has been outspoken that carriage is not a “birthright” for new networks and that all channels will be subject to sharper scrutiny than ever before. The No. 2 U.S. cabler is far from the only distributor with this viewpoint.

“It’s a very competitive market and distributors are under immense pressure to make sure all their channels are providing value,” Brad Schwartz, president of entertainment and media for TVGN, said. “The programming needs to be compelling and differentiated and to create an attachment with an audience. If it’s not, the network needs to change quickly.”

“It’s a challenging road, especially for any independent right now,” programming consultant Lynne Buening, a former head of programming at RCN, noted, pointing to the struggles that even the mighty Oprah Winfrey has faced in creating a successful cable network (in her case, the Discovery Communicationsbacked OWN).

Many of the newcomers have deep-pocketed owners, from Al Jazeera America’s sheikh in Qatar to AXS TV’s Mark Cuban. The question remains, however, as to how patient they will be.

“How much runway will they be given?” Buening asked. “How fast do they have to grow until they show a return?”

The task is made more challenging for independents because “the big media conglomerates are doing all they can to push their channel bundles at the expense of independent networks,” Cuban said. “They all copy each other. They spend a lot of money to try to have one show that you can leverage to get jacked-up carriage fees. Then, they fill the rest of their schedule with repeats of that show and licensed shows anyone can get online.”


Dennis Gillespie, senior vice president of distribution at Outside Television, argued that while “distribution certainly is a challenge,” service providers need strong independents to flourish. That’s because when a handful of big companies own all the networks, then distributors have little leverage.

Pivot president Evan Shapiro said his channel has tried to offset the competitive advantage that, say, Esquire has as an NBCUniversal creation by finding programming partners such as Rolling Stone and Univision (which is creating a 10- part documentary that will air in Spanish on Univision and in English on Pivot).

“We are constructing a vertically integrated conglomerate,” Shapiro said. “We’re independent, but not alone.”

Each of the new networks is, naturally, convinced that it has found an underserved audience and a formula for success. Looking at their fellow rookies, they don’t see competitors, but like-minded innovators who can help cable operators hold onto viewership.

“All have a shot at creating their own niche,” Schwartz said.

Added Shapiro: “These new networks have thought long and hard about what we’re doing. The world needs more original channels, especially ones that don’t sink to the lowest common denominator.”

Original programming on distinct brands targeting underserved niches “will not steal shares from other networks,” Shapiro argued. “We will steal shares from other outlets, from, say, Facebook, and bring them back to TV. We will make the pie bigger. It’s very exciting for television.”

At Pivot, the goal is to attract millennials — the always desirable young demo — with socially relevant programming, building on the formula of parent company Participant Media, which has produced such documentaries as An Inconvenient Truth, The Cove and Food Inc., and feature films such as Lincoln, Promised Land and The Help.

“The entire company is dedicated to entertainment that inspires change, which has been ratified by the marketplace in films,” Shapiro said, adding that millennials love television, but want to watch only relevant programming in ways that fit their lifestyle, which could mean on another platform or on-demand.

Al Jazeera America promises in-depth and even longform documentary coverage of domestic and international news — and also business, sports, technology and every other topic — in a way that stands apart from the American- born 24-hour channels, said Ehab Al Shihabi, executive director of international operations for Al Jazeera and the senior executive developing Al Jazeera America.

“What you won’t see are shout-fests, oversized personalities and sensationalist programming,” he said.

AXS TV is a partnership between Cuban, AEG Worldwide, Ryan Seacrest Media and Creative Artists Agency, which hope to use their combined clout to create a channel across different platforms that bring audiences live concerts and other events.

“I believe that live is where the greatest TV impact on audiences will occur,” Cuban said, “Music, and in particular live music, has been orphaned. Concert tours come to us asking which stop on the tour we can broadcast. They know it increases ticket sales and fan affinity.”

To strengthen its niche, AEG is offering ticketing opportunities to distributors like Dish Network. In the future, AXS TV subscribers could get first shot at tickets for certain concerts.

AXS has continued adding partners, who are providing programming instead of money. The Huffington Post will offer daytime programming and CBS recently joined forces with AXS, giving the network access to major events on that network and the chance to create unique shoulder programming.

“For an independent network, we have to innovate not only on the screen, but also with our business model,” Cuban said.


Each of the networks faces distinct challenges. Al Jazeera America’s sibling, Al Jazeera English, has earned plaudits for its journalism — especially covering the Arab Spring — but its image suffers from association with parent broadcaster Al Jazeera, which broadcast Osama Bin Laden videos in the period after the 9/11 attacks.

While Al Jazeera English has garnered a following among younger demographics and in New York and Washington, in large swaths of the country, Buening said, “they still have to pass through stigma to look at content.”

Still, Al Shihabi argues that their research shows there is an American news audience that wants “more in-depth, unbiased investigative journalism, the type the Al Jazeera is dedicated to providing” and since more than 40% of the online audience for Al Jazeera English comes from the United States, he is confident that the network will be embraced here. (He adds that Al Jazeera America will be editorially independent with a U.S. board of directors and a diverse domestic advisory board.)

That doesn’t mean it will be easy — even though Al Jazeera America is part of a strong global media network with the largest newsgathering capabilities in the world, it is building everything domestically from the ground up: logos, studios, 12 bureaus, programming ideas, staff and even new email accounts. The network is also taking several critical steps to improve its distribution.

Al Shihabi said Al Jazeera America will launch with close to 50 million homes via Comcast, DirecTV, Dish Network, Verizon Communications and AT&T, as well as some smaller operators, but it will also address concerns of other operators (like Time Warner Cable) about its online content or sister channel Al Jazeera English being available for free.

Participant bought Documentary Channel and the distribution for Halogen TV and will put Pivot in 40 million homes when it launches in August, Shapiro said. It is also following a new path, offering Pivot as a Netflixstyle streaming video service for a small monthly fee.

Shapiro acknowledges having to overcome initial skepticism. “Does every cable operator greet us with a bear hug? No,” he said, especially when they discuss the idea of the programming being watched on other platforms.

He said the streaming digital platform can be bundled with other networks that attract similar demographics.

“They ask if this might cannibalize viewership.” But with Pivot’s flexibility in terms of tiers and its argument that the network will “grow a new set of consumers” who may then come to watch more cable after sampling Pivot, Shapiro said the network has won distributors over, though major players like Comcast and Time Warner Cable are taking a wait-and-see attitude on a longterm deal after the legacy carriage expires.

“We tell them we want to be the best you have and we’re willing to prove it. We’re going to create demand with a consumer base that is lost right now. We’ve been getting good reactions.” (He adds that advertisers followed a similar path from skeptics to interested partners.)

Outside’s Gillespie said networks like his — or Esquire, TVGN or even Al Jazeera America — have an advantage because a strong recognizable brand is crucial to cut through the clutter. “To create a brand is a very tall order in this environment,” he said.

TVGN’s Schwartz agrees, saying Esquire is “ahead of the game” compared to where an identical network without the brand recognition would have been, adding that TV Guide can boast “universal recognition.”

“Content and strong brands rise to the top,” he said, so for the unknown brands success may depend on how much they’re willing to invest in marketing.

But Shapiro said “the best marketing for content is content.” Shapiro argues that Esquire was smart to delay its launch to add more original programming. “You can’t say, ‘We have a great brand. Trust us. Here are six hours of programming.’”

Esquire Network executives declined to be interviewed for this story, but NBCU said last week the former G4 will relaunch officially on Monday, Sept. 23. Its first primetime show will be a two-hour special celebrating the magazine’s 80th anniversary. Other original shows that have already been announced include “underground” cooking competition Knife Fight; travel show The Getaway; a style show hosted by NBA star Baron Davis called How I Rock It and a New York “nightlife real estate” skein called Risky Listing.

Pivot’s programs include HitRecord on TV, a themed twist on variety shows produced and hosted by movie star Joseph Gordon-Levitt, with the ability for viewers to contribute via the Internet, and a Meghan McCainhosted talk show.

The good thing, Buening said, is that these networks have deep enough pockets that they can be the tortoise and not the hare.

“Nuanced TV has its place,” she said. Networks like Pivot and Al Jazeera America don’t “have to be big,” but “if they are well done” they will attract distributors and advertisers.

“It’s going to be very tough but if they stay around and can accept low ratings, they have a chance,” Buening said.

Stuart Miller

Stuart Miller has been writing about television for 30 years since he first joined Variety as a staff writer. He has written about television for The New York Times, The Washington Post, the Los Angeles Times, The Guardian, The Boston Globe, Newsweek, Vulture and numerous other publications.