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Rainbow’s Mag Rack Goes After Advertisers

Rainbow Media Services’ fledgling video on demand service known as Mag Rack plans to begin seeking advertising for the first time.

The 7 million-subscriber service — which has struggled to gain distribution on cable systems for its complete lineup of video magazines, which range from “Aviator’s World” to “Yoga Retreat” — is also reformatting its distribution strategy. Also for the first time, Mag Rack has allowed systems to distribute individual magazines, picking and choosing, a la carte, according to Dan Ronayne, senior vice president and general manager for Mag Rack and its sister sports-oriented VOD service, Sportskool.

The steady growth of the video-on-demand business has become a two-edged sword for Rainbow, one of its pioneers. On one hand, the audience is quickly expanding: Ronayne says more than 23 million households in the U.S. can now receive programming on demand. This provides more opportunities for viewers to sample Mag Rack programming.

Plus, that growth has spawned interest from advertisers, who see VOD as an opportunity to reach very particular types of viewers, from gardeners to bird lovers to snowboarders.

“We’re not talking huge dollars, but with VOD’s availability at 23 million, clearly the niche and target appeal is drawing interest,” said Bruce Leichtman, principal analyst for research company Leichtman Research Group Inc.

As a result, Mag Rack is aggressively pitching agencies to buy sponsorships and advertisements within its programming, according to Mag Rack and Sportskool vice president of integrated marketing and sales Phil Summers. “We’ve had some positive feedback and we’re pretty excited that we’ll be able to make some announcements soon,” although he would not reveal specifics,” he said.

But Summers predicts that nearly all of Mag Rack’s programming will have some advertising element attached to it by 2007.

On the other hand, this growth means more competition. The most formidable entrant: Comcast Corp. and its rich on-demand programming lineup, which includes movies, sports programs, newscasts and kids shows.

To combat this, Ronayne said the network has altered its distribution strategy to allow operators like Time Warner Cable to cherry-pick categories as a prelude to launching the full Mag Rack service.

Time Warner in January launched the company’s Kids Club programming cluster as part of its free on demand lineup, and plans to add other Mag Rack programming later this year.

“The old rules are gone … we look at each situation as new and different,” Ronayne said. “Time Warner saw the value of our kids’ programming and launched it as part of their commitment to launch MagRack.”

The company has also invested in exclusive, original programming fare that it hopes will differentiate the service from other on-demand services.

In so doing, the network has attracted several well-known personalities to help develop original fare. Actor John Lithgow for example will star and produce a block of pre-school programming dubbed “Paloozaville.”

The 20-segment show is part of the company’s popular Kids Club category, which has been re-positioned to appeal to toddlers and their families, according to Roynane.

Other new programming set to launch this year include Katie Brown @ Home, a 21-part original series which will provide inexpensive ideas on how to “cook, nest and grow”; The Pet Shop, with Marc Morrone, a 25-part original series targeting pet owners; and Get Clark Smart, a series of segments on how to live large on a budget hosted by nationally syndicated radio talk show host Clark Howard.