Cable Operators

Net With Universal Appeal?

12/05/2004 7:00 PM Eastern

Bono is an international superstar, but in an era of iPods and downloadable tunes, skeptics wonder if a 24-hour music-video channel featuring him and other artists can get much traction.

Sources confirmed last week that the U2 lead singer’s record company, the global music giant Universal Music Group, is in talks with EchoStar Communications Corp. about launching a cable network.

Officials at Universal Music, part of Vivendi Universal, and EchoStar declined comment last week. But sources said if all goes as planned the music-video network, developed by MTV: Music Television and Infinity Radio veteran Andy Schuon, would debut by 2005’s second quarter.

In addition to U2, the network will feature Universal talent such as Shania Twain, Gwen Stefani and Eminem.

Universal had talked with DirecTV Inc. about a similar music-video channel, but those discussions quickly broke down, according to sources. A DirecTV spokesman confirmed there were talks with Universal about the channel.

A variety of programmers and music companies have threatened to launch music-video cable networks to compete with Viacom Inc.’s gallery of music-oriented networks — MTV, MTV2, VH1, Black Entertainment Television and CMT: Country Music Television.

Fuse, owned by Cablevision Systems Corp., has made a lot of noise and mounted a vigorous marketing campaign to challenge MTV. But taking on that dominant player is no easy task.

“Any music channel would certainly have to differentiate itself from what’s already out there today and come at it from a slightly different perspective, and that’s been hard to do,” one cable operator said. “It’s really hard to usurp what MTV has out there.”

Like Fuse, Universal Music figures it could exploit MTV’s decision to downplay music videos in favor of long-form programming. Universal also wants a showcase for its international artists who don’t have a high profile in the United States, sources said.

Original programming — such as backstage footage, concert footage and in-studio interviews — would augment videos on the network, which sources said is “going to be very performance-based.”

Music-savvy executives called it a “risky” venture that could hurt Universal Music’s relationship with MTV, a channel artists still respect and want their videos to run.

“There’s a psychological factor — if you’re talking about a 19-year old artist who grew up watching MTV, being on MTV is a sign that they made it,” said one veteran cable programmer.

A second cable-network executive added: “It’s a very, very ambitious high-risk proposition. If you said Comcast, I’d say there’s a chance. But with the smallest satellite service, in EchoStar, I’m not sure if it works.”

That executive, who has knowledge of Universal Music’s plans, said the music conglomerate could be more successful in reviving its 1 a.m. premium-service concept, featuring uncensored videos.

“With that, you have a compelling consumer proposition and it’s a complement to [MTV], not a competitor,” the executive said.

Officials at MTV declined to comment. But Fuse, with 37.6 million subscribers, issued a statement.

“Two years ago, it was inconceivable that an independent, alternative network could compete in the music television landscape,” said Andrea Greenberg, president of Cablevision Sports and Entertainment Networks. “Fuse proved that not only could such a network exist, but can be successful. We definitely lit the 'fuse’ for competition, which is healthy.”

It was unclear if the new music-video channel would be exclusive to EchoStar’s Dish Network, which has roughly 10 million subscribers.

Frank Hughes, senior vice president of programming for the National Cable Television Cooperative, said he saw some potential if the new service is a digital channel, particularly with MTV airing fewer music videos.

“There is that void that exists, I guess,” he said. “Depending on the artists, how many artists they have, what they have the rights to — that would be my big question, what type of a rotation and a playlist that they’d have. I can see some merit, possibly.”

A more skeptical view came from a cable operator. “I don’t see any overwhelming need for another music channel. MTV has a variety of music channels right now.

“You’ve got Music Choice and DMX with digital. And streaming music is becoming much more important in younger people’s lives, and that’s taking a greater role in terms of their music habits.”

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