To make the case that cable companies should group networks by genre, programmers like Court TV and ESPN turn to the supermarket analogy.
“If the cable lineup were a supermarket, you wouldn’t go buy your Special K in aisle three and Cheerios in aisle seven and your Total in aisle 10,” said Bob Rose, Court TV’s executive vice president of affiliate relations. “You wouldn’t find your pasta in one aisle and your pasta sauce in another aisle. Lineups have to be thought through carefully.”
Sean Bratches, president of Disney and ESPN Networks affiliate sales and marketing, drew a similar comparison, noting that milk and eggs are all found in the dairy section of a grocery store.
Bratches maintains that the same kind of logic should apply to cable, so ESPN wants its core network and spin-offs positioned together on the dial.
TESTING IN DALLAS
This summer, Comcast Cable in Dallas will be become a test case — a kind of experiment as to the impact not only of grouping channels by genre, but unifying program lineups across a market.
Comcast is in the midst of standardizing its expanded-basic channel lineups in Dallas and aggregating networks in such genres as sports, news, children’s programming, education, movies, music and Spanish-language services together on the dial.
“We call it neighborhood positioning,” Rose said.
Court TV will be collaborating with Comcast in Dallas to study the impact of the lineup genre-groupings and standardization, looking at how disruptive the changes are, what the customer-satisfaction level is afterward and the effects on viewership.
“Court TV is one of the few programmers that has really embraced this and is aggressively going out,” said Michael Ortman, vice president of programming for Comcast’s Atlantic division. “They are actually going to do this research for us in Dallas. We want to see what the customers like.”
Comcast’s philosophy is simple.
“If we can get 60 of the 80 channels the same, it’s a major benefit to everybody,” Ortman said.
With the changes, Comcast will also be making room for advanced services like video-on-demand in its program lineup, and will be able to take advantage of channel-positioning incentives offered by programmers.
The direct-broadcast satellite companies have standard lineups across the nation, and they group channels by topic.
But that practice is far less common in cable, typically done just at the DMA level.
Cox Communications Inc., for example, has standardized channel lineups in some of its larger clusters, such as Baton Rouge, La. In that market, Cox acquired the systems from AT&T Broadband.
The system served seven parishes and had seven different lineups, which Cox ultimately matched up for that market, according to Nancy Heffernan, the MSO’s director of video product marketing.
SUBS HATE CHANGE
While some MSOs agree that uniform channel lineups and grouping networks by genre make sense in theory, they are often reluctant to actually do it on expanded basic. They said they don’t want to rile up subscribers.
“It might be desirable to aggregate by genre, however, we have been reluctant to be disruptive to our customers,” said Jerry McKenna, Cable One Inc.’s vice president of strategic marketing. “The second-worst thing to a rate increase is changing your channel lineup, in terms of customer frustration, calling up, etc., so we have not moved in that direction.”
Cebridge Connections is trying to have some standardization in its channel lineups, but it has more pressing priorities at this point, according to spokesman Peter Abel.
“We do have 700 systems serving upwards of 1,000 very distinct communities and we try to have consistency in the most popular, highest-rated networks across expanded basic,” Abel said. “But you will find variations, depending on local community needs, interests and desires.”
Time Warner Cable has conducted focus groups on channel positioning and lineups and is putting together recommendations for its divisions, according to MSO spokesman Keith Cocozza.
But Cocozza — and some other MSO officials and programmers — argue that channel positioning becomes less important in today’s world of interactive program guides, where a subscriber can plug a topic they’re interested in into a sophisticated navigator and be told all the channels where that kind of programming airs.
Ortman is an old hand at smoothing out disparate channel lineups in markets, having been involved in it to one extent or another in about 20 instances.
“What we’re finding is when we go to some of these markets that are new to Comcast, they are the remnants of many previous MSOs,” he said. “You can see the MSOs’ legacies by just looking: This used to be Jones, this used to be Adelphia, this used to be TCI, this one used to be MediaOne, yet they’re all serving the same DMA.”
20 DALLAS LINEUPS
In the Dallas Metroplex, Comcast is initially trying to boil down more than 20 different channel lineups to five, according to Angel Biasatti, executive director of communications for Comcast in Texas. Ortman said ultimately, the goal is to winnow it down to “close to one” lineup in Dallas.
Basically, Comcast is rolling out the revamped lineups to clusters of 50,000 subscribers at a time after a rebuild is completed and channels are added to a system, according to Ortman. For instance, Comcast is adding TV One, the African-American channel in which it holds a stake, in Dallas.
“We figure wait ’til the rebuild is over and celebrate its completion by being able to mobilize all your customer-communication tools,” Ortman said. “If you do a neighborhood at a time, you can’t do cross-channel [spots] … You can’t get your call center all fired up one Saturday morning for the big day.”
To stay competitive with DBS, programmers argue for cable operators would do well by grouping channels by topic.
“We’re proponents of a genre-based structure and believe that in the days where there was one channel per genre, it didn’t matter,” Rose said. “But now, where you’ve got lineups with several news networks, and several kids’ networks and several sports networks and regional sports networks and general-entertainment networks, and broad niche networks, there has to be a flow. There has to be a sensibility in the eyes of the consumer.”
Added Bratches: “This is a consumer benefit.”
Court TV is lobbying for a slot on program lineups between broad general-entertainment networks — like USA Network or Turner Network Television — and the broad niche networks, such like Discovery Channel and A&E Network.
On Comcast’s new lineup in Dallas, for example, Court TV is on Channel 47, between FX and USA. Rose said that Court TV’s new format, with higher-rated investigative programming at night, provides a good transition from general networks to niche services.
ESPN offers operators economic incentives to “bookend” ESPN and ESPN2 around ESPN Classic and ESPNews, according to Bratches. Those adjacencies lead to ESPN’s viewers to sample the newer spinoffs, ESPN Classic and ESPNews, he said.
The sports-programming giant also looks for its networks to be positioned channel 36 or below, and right now more than 80% of ESPN’s multichannel carriers do gives the sports network that kind of channel slot, according to Bratches.
“The ratings are higher the lower you are on the bandwidth,” he said.
Some smaller cable operators have complained about ESPN’s desire for its networks to be adjacent, by offering financial incentives like license-fee discounts. They say they want the freedom to create their own program lineups.
Court TV’s strategy is not to just get a lower dial position, something that some programmers pay cable operators for, according to Rose. Court TV would rather be in the number 40 channel range if it’s next to a USA or a TNT, for example, than be “sitting on Channel 12 next to some [local origination] channel,” Rose said.
Court TV also makes this argument to cable systems: If its ratings improve, that will directly benefit the system. That’s because Court TV touts the fact that it provides operators with three minutes of local avails an hour, which can be used to promote new services like VOD, broadband and voice-over-Internet protocol.
“If we can lift our ratings by a proper adjacency, they’re going to lift their local GRP [gross rating point] delivery,” Rose said. “And their local GRP delivery is going to translate into more exposure for their broadband commercials, their VOD commercials, so you want to maximize viewership of the cable networks.”
GETTING MESSAGE OUT
To ease the changes for subscribers, Comcast in Dallas has used a variety of means to communicate, including brochures, legal notices, cross-channel spots, newspaper articles, outbound calling to customers, direct-mail pieces and the TV Guide Channel. Lineup changes are made overnight in the early morning, with settings like parental controls and favorites automatically reset for customers with digital converters.
Comcast has only owned its Dallas cluster for a year, and has invested $70 million in that plant, Biasatti said. The operator has just launched high-speed data there, and will roll out advanced services such as VOD, HDTV and DVRs soon, she added.
Revamping channel lineups will give Comcast space to open up and reserve four adjacent channels for on-demand content, Biasatti said.
Comcast believes that aligning channel lineups in a particular market makes sense, “just from the standpoint of ease of use and consistency within the market,” said Comcast senior vice president of marketing and new products Andy Addis.
But there is no movement afoot to do that on a national level.
“To try to force all markets to go to the same lineup, the value that’s created is offset by the pain,” Addis said.
That’s Cable One’s philosophy, even though most of its systems carry the same 36 channels, through deals that were negotiated on the corporate level.
Those local Cable One systems are then free to select five other networks — be they religious or ethnic services — to carry on their 41-channel expanded basic lineups.
“But we do not dictate the channel numbers, or the aggregation by genre,” McKenna said of the common 36 networks that are carried by Cable One’s systems.
Crafting a single channel lineup for use across all of the MSO’s systems would be hard, according to McKenna, since the TV stations they have to carry vary from market to market.
“Some systems may have 15 or 20 channels in lifeline [service] because of all the different must-carries and off-airs,” he said.
IPG IMPACT SEEN
Officials at MSOs such as Time Warner and Comcast argue that ultimately, sophisticated interactive program guides will make channel positioning less and less important.
“Consumers will evolve in how they search for things,” Addis said. “It will make, over time, specific channel lineups and the sequencing of channels almost irrelevant.”
But Bratches and Rose argue that old habits die hard, and many viewers still rely on traditional methods — channel surfing or punching a specific channel number into their remote — to select the network they want to watch. And they claim that makes a channel’s berth still very important.
“There’s a need for MSOs to create a lineup that makes it as easy as possible,” Rose said.
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