Skip to main content

ZDTV Tries to Trade In on Modem Frenzy

San Francisco -- Cable operators' inexorable
drive toward building a high-speed Internet-access business may prove to be
computer-publishing and trade-show giant Ziff-Davis' ace in the hole for successfully
launching its new cable channel, ZDTV: Your Computer Channel.

'Our target demo [for cable-modem subscribers] is
their customer,' said Linda Stutchell, vice president of programming for Harron
Communications, which will launch the new network this spring on an analog channel on its
63,000-subscriber southeast Michigan system.

Stutchell was referring to the millions of subscribers to
Ziff-Davis' 30 computer- and Internet-related publications, including PC Week,
Computer Shopper and Interactive Week, as well as the thousands of
influential business executives who attend Comdex, the gargantuan annual Las Vegas-based
computer trade show owned by the company.

What's more, Ziff-Davis' Web site, ZDNet, which
will be marketed -- and programmed -- in tandem with the cable channel, is already
established as a leading Internet site for computer, media and high-technology
information. According to RelevantKnowledge, an Internet-audience-measurement firm, ZDNet
averaged an estimated 4.1 million different users in November, making it the
second-most-popular TV-industry Web site behind CNET, which attracted 5.1 million users,
but ahead of Cable News Network (3.4 million users) and MSNBC (1.4 million).

Michael Mason, vice president of affiliate sales and
marketing for ZDTV, said appealing to operators that want to launch cable-modem service
has been one of the network's major selling points.

'We want to become the barker for modems,' said
Mason, who spent eight years with Home Box Office in sales and marketing and who has been
with Disney Channel for the last 10 years, most recently as vice president of sales.

Mason said ZDTV will provide operators with free time on
the channel where they can insert local programming for their cable-modem service. The San
Francisco-based network will also provide operators with Ziff-Davis subscription lists for
marketing campaigns and line up speakers for local computer-related events in an
operator's market.

In addition, ZDTV has been promising operators that it will
work with local retailers to sponsor events promoting both the new channel and the local
cable system's new high- speed Internet-access service.

Mason cited Gateway 2000's recent opening of a
computer-demonstration center in Atlanta as an example. When Gateway -- which is a
'charter sponsor' of ZDTV, along with other industry heavyweights such as Dell
Computer Corp., IBM Corp., Intel Corp., Micron Electronics Inc. and Microsoft Corp. --
introduces a computer with a built-in cable modem, Mason said, it represents the perfect
opportunity to 'establish a relationship' with local cable operators, brokered
by ZDTV.

The network's ultimate pitch to operators launching
cable-modem service, Mason said, is to convince them that 'not having a channel like
this makes [launching high-speed Internet access] harder to pull off.'

So far, the handful of operators that have signed on to
carry the network are, in fact, launching cable-modem service, and they like what
they're hearing.

Stutchell said she viewed ZDTV as a 'marketing
opportunity to cross-promote the cable-modem business.'

Mary Alice Bauchman, vice president for Prime Cable, who
manages the MSO's 260,000-subscriber Las Vegas system, will launch ZDTV as an analog
channel this spring. Prime debuted its own cable-modem service several months ago.
Bauchman said she was 'bowled over' by the idea of using the new network as a
way to promote the system's fledgling Internet-access business.

'They've offered us the chance to do infomercial
programming to promote the high-speed service,' Bauchman said. 'We're also
expecting to do co-op advertising and promotions with retailers. It's really
fantastic for what we want to do here.'

Both Stutchell and Bauchman were also pleased with the
financial offers that they received from ZDTV to carry the channel. Neither MSO nor the
network would reveal the exact terms of the deal, but ZDTV president and CEO Larry
Wangberg said the network is offering systems 'a very attractive rate card with
significant incentives for rollouts.'

Ziff-Davis is bankrolling the service with about $100

Systems are believed to be receiving deals with no
license-fee payouts for several years, substantial co-op marketing guarantees and an
upfront cash payment.

But Mason and Stutchell asserted that the upfront financial
terms were less important than the programming concept and leveraging the channel to help
operators launch their cable-modem businesses.

Payment for carriage, Mason contended, is merely a
short-term tactic to help guarantee an analog spot on the lineup, but he said the network
was prepared to accept digital carriage if there was no analog space available.

At least one leading MSO marketing executive, however, was
not persuaded by Mason's argument.

'This channel is not about the Internet,' the
executive maintained. 'It's about analog shelf space, and they have to get it
because digital won't work for an independent with no other cable affiliation.'

'[ZDTV] can't do it without the big guys,'
the MSO executive added. ' They should sit down with [Comcast Corp. president] Brian
[Roberts] and [Tele-Communications Inc. president and chief operating officer] Leo [J.
Hindery Jr.], pay them $5 a sub, write a check and give them a piece of the action.
Otherwise, they're just going to limp along.'

Other cable executives questioned ZDTV's programming
premise and wondered how the channel could provide compelling shows about computers and
the Internet 24 hours a day, seven days a week.

'Sometimes people confuse a show about something that
people are interested in with a network,' said one executive. 'They're two
very different things.'

Although ZDTV has not shown any of its programming yet, it
hired MTV: Music Television veteran Greg Drebin as senior vice president of programming.
Drebin, who held the same job for MTV, said his goal was to emulate the success of CNN and
ESPN as networks that established themselves as both 'first to market and leaders in
their category.'

As one veteran cable-network executive said, 'I
don't know how you make that kind of programming exciting, but if they crack the
formula, they'll be on the road to gold.'