Content

Coming Out in America

4/24/2005 8:00 PM Eastern

The movie Adored: Diary of a Male Porn Star may best sum up the challenges that lie ahead for the three fledgling channels aimed at the lesbian, gay, bisexual and transgender community in the United States.

While the Italian film’s raciest quality may be its U.S. title, as an offering on the video-on-demand service Here! TV, it has played into the hands of news reports about the controversial nature of Gay TV channels, and it serves as ready ammunition for special-interest groups like the American Family Association as they marshal their forces to protest the channels.

So far Here! has gotten little flak from such groups, its executives say. But MTV Networks’ Logo, slated to launch June 30, is preparing for the worst by training its affiliates to explain Logo to concerned callers. It remains to be seen what storms may be brewing — as well as how many networks the market can support. But the three channels aimed at the U.S., which also include Q Television, have given themselves very unique qualities in an effort to differentiate themselves with the consumers, operators and satellite platforms they need to woo.

HERE! OUT THE DOOR

Here! has taken the lead in seeking carriage in the U.S. largely because it has chosen to forgo the traditional linear model in favor of a “platform agnostic” VOD or subscription VOD service. It is a premium service aiming high with bigger budgeted movies, scripted series and specials. Almost 25% of its lineup is devoted to originals.

Here! at a Glance
Launch date: September 2003
Owners: Majority owners Steven Jarchow and Paul Colichman
Business model: Premium service available via VOD, SVOD, PPV or as a 24/7 linear channel
Programming highlights: TV production of Terrence McNally’s The Lisbon Traviata; gay-themed soap Paradise Falls; Hollywood-caliber original films, including comedy Too Cool For Christmas, war film Tides of War and thriller Urgency; original gay detective series Third Man Out; original lesbian supernatural thriller Dante’s Cove; talk show The Elizabeth Birch Project; over 1,000 acquired gay and lesbian films.
Demographic skew: 25-54
Wants to be known for: High-quality, authentic gay programming
Doesn’t want to be known for: Gay porn
Distribution focus: “Platform agnostic” available as VOD, SVOD, PPV or linear 24/7 offering (DirecTV Inc. carries it this way)
Distribution to date: Available to 40 million homes, VOD on Time Warner Cable, Adelphia Communications Corp. and Comcast Corp.; SVOD on Cablevision Systems Corp., RCN Corp., Starpower Communications LLC, Cox Communications Corp.; linear or PPV on DirecTV; PPV on Dish Network
Top executive: CEO Paul Colichman
Contact:245 Park Avenue 24th Floor New York, NY 10167 (212) 372-8863 www.heretv.com

Its founders — who have headed the film distribution and production company Regent Entertainment for more than a decade — hatched the idea in 2002 as an outlet for the films in Regent’s library, such as Oscar-winner Gods and Monsters, starring Sir Ian McKellen and Brendan Frasier. They quickly dismissed the idea of trying to woo advertisers into supporting gay films and series because they felt it would take away the creative freedom they needed to authentically serve the gay community.

“They wanted me to create programming I was uninterested in,” says Here! CEO Paul Colichman about his discussions with the ad community. “They wanted to get gay dollars into their company coffers, but they didn’t want to support us.”

The decision to run on VOD and SVOD platforms in lieu of linear carriage was also one of expediency. The last thing operators want is another license fee weighing down their video margins, regardless of how underserved the audience is, says Here! president and chief operating officer Andrew Tow, a former executive at the MSO Century Communications Corp.

“The addition of any one new ad-supported channel is not going to move the needle, in terms of securing a new customer or stopping one from churning,” says Tow, adding that operators he spoke with tended to ask: “Why should I devote precious bandwidth to something that would erode margins rather than help them?”

Here! has gained carriage faster than expected; new deals with Cox Communications Inc. and Comcast Corp. announced at the National Show have made the service available to 40 million homes, including a linear option available on DirecTV Inc. Here! officials keep take rates close to the vest, but they will say the service sells better in smaller communities outside big cities, where gay entertainment is less available.

Tow and Colichman attribute Here!’s distribution pacts to the quality of its programming, which has involved an investment of $50 million so far in 2005. Because of its ties to Regent, its executives can debut some titles at the same time they debut on home video, and executives say that’s a strong selling point to operators.

“We’re able to make the deals more favorable to [the operators] without sacrificing revenue in the aggregate,” Tow says.

LOGO’S WIDER NET

Logo’s mission is quite different and so are the challenges it faces — as is evidenced by the time Viacom Inc. is taking to get the channel off the ground. Viacom began discussing the network three years ago, and has pushed its original launch date from February to June 30.

Logo at a Glance
Planned launch date: June 30, 2005
Owner: MTV Networks
Programming highlights: Original reality series Cruise and My Fabulous Gay Wedding, scripted series Noah’s Arc, documentaries, acquired movies, programming in conjunction with other Viacom Inc. brands such as CBS News and MTV: Music Television, and The Big Gay 100, a countdown show produced with VH1.
Business model: Basic ad-supported cable network with licensing fees
Demographic skew: All ages
Wants to be known for: Its broad reach
Doesn’t want to be known for: politics, salaciousness
Distribution focus: digital basic
Distribution to date: Expects to be in 10 million homes upon launch, deals with Adelphia Communications Corp., RCN Corp. and Time Warner Cable, in negotiation with Comcast Corp. and others
Top executives: Brian Graden, president of MTV Networks Entertainment and president of Logo; Lisa Sherman, general manager of Logo
Contact:www.LOGOonline.com (212) 767-8732.

Some observers contend that Logo will be a lightening rod for criticism, and it will have to be patient for operators and advertisers to climb on board. But they also note that if anyone can launch a gay digital-basic channel, it’s Viacom, given the resources of its network holdings.

Nicole Browning, head of affiliate sales and marketing for MTVN, puts a slightly different spin on the situation: “There’s a huge receptivity so far, because there’s nothing like it in the marketplace. We’re about brand-building. We’ve built fabulous brands by building amazing emotional connections to the audience, and that’s the expertise required to make Logo happen.”

From a programming standpoint, Logo is casting a wide net. The first year will feature a slew of documentaries showing “real gay people in real life,” such as one about the gay rodeo circuit or another about what it’s like to be gay and Latino, according to spokesman David Bittler. The idea is to create loyalty among the LGBT community.

Logo is also betting that it can attract a wider audience than the 7% of the population that identifies itself as gay with some of its original fare. Among them is the gay makeover comedy My Fabulous Gay Wedding, from The Kids in the Hall’s Scott Thompson, and the scripted series Noah’s Arc is in the vein of Sex and the City. Forward-thinking advertisers may also want to be associated with a network that’s inclusive of alternative lifestyles, Logo executives say.

“It’s a great opportunity for [an advertiser] to show they are progressive and out for the customer,” says Todd Evans, president and CEO of the gay media ad rep firm Rivendell Media. “Imagine how big the gay-friendly market is.”

Logo’s wide appeal and availability is precisely why some in the gay community think the network is a bad idea, according to its rivals. The fear is that the pressure to conform to general-market mores will force it to become “gay lite,” airing only safe, Will & Grace-type shows that — in the opinion of some — serve single women better than gays and lesbians.

“Operators are still concerned with launching gay and lesbian programming that’s easily accessible by others. In many areas, it’s just not going to happen,” says Cathy Rasenberger, an industry consultant hired to help with affiliate sales and marketing for Q Television. “It needs to be subscription-based so that it can deal with issues of the community.”

“I have nothing against Logo, but it’s not fair pushing the gay agenda on mainstream TV. There will be backlash all over the place,” contends Frank Olsen, CEO and founder of Q. “When parents come home and see their kids watching two boys kissing, Momma’s going to flip.”

Whether or not Logo will show boys kissing remains to be seen; Bittler would not say. But Browning does note: “We’re working in normal [content] standards of basic cable. We’re not pushing boundaries for the sake of it.”

Q’S APPROACH

As their criticism of Logo implies, executives at Palm Springs, Calif.-based Q Television are banking on a different strategy. They believe that Q’s independent gay ownership and subscription-fee, ad-supported positioning will make it an attractive alternative.

Q Television at a Glance
Launch date: Oct.1, 2004
Owners: Triangle Multi-Media and privately held investors
Business model: Mini-pay service at $7.50 per month, 50% share with operator
Programming highlights: Signature shows include nightly On Q Live and Q On the Move, shot on location covering gay and lesbian events; new live morning show Gay Day, gay rodeo, theater, coverage of The Gay Games 2005, acquired gay-themed movies.
Demographic skew: All ages
Wants to be known for: Gay lifestyle channel built by gay people for gay people
Doesn’t want to be known for: Exploiting the gay community
Distribution focus: linear digital pay on cable and satellite
Distribution to date: Available to 400,000 RCN Corp. homes
Top executive: Frank Olsen, CEO and founder
Contact: 303 North Indian Canyon Way Palm Springs, CA. (760) 323-4455 www.qtelevision.com

The channel plans to feature a hefty dose of live community programming, close to 30 hours a week. Q on the Move and the nightly prime time block On Q Live will include coverage of gay sports — such as The Gay Games — as well as theater performances and events like the drag-queen procession of ferry boats held every July 4 off the beaches of New York’s Fire Island. The network is also planning a two-hour morning-news show debuting in June. Q also recently agreed to lease 30 minutes per day on the 53 million-home Oxygen channel to run Q on the Move.

Q’s distribution progress has been slow going: So far it is only available to RCN Corp. customers, which has a subscriber base of about 400,000. But meetings with operators at the National Show has Olsen confident enough to predict that Q will be in 16 million homes by June. And he’s willing to wait until the network can get carriage as a linear pay channel.

“Don’t stick me out on VOD; I hate that,” says Olsen. “We want to be like any other channel, and it’s worth the holdout. Otherwise you’re just a token to the gay community.”

Q has addressed solvency concerns by shoring up its finances with a private-equity fund. The company expects to break even in 2008. It also completed construction on a 48,000-square-foot production studio in Fort Worth, Texas, last month; hired industry veteran Carol Hinnant away from Here! as vice president of affiliate sales and marketing; and is spending $12 million this year on original programming.

The network is willing to split a suggested $7.50 subscription fee with operators. It has eight minutes of advertising per hour, two minutes earmarked for local avails and 6 minutes to national ads. Despite the low distribution, advertisers such as Orbitz, which is also a charter sponsor of Logo, have approached Q to buy air time.

“It’s a new community of advertisers to go after, so we won’t be cannibalizing existing ad revenue,” says Rasenberger.

THE AD FACTOR

It’s too soon to tell if advertisers and subscribers will support three separate gay offerings. But the services do have some built in advantages: the channels’ focus-group research shows pent-up demand by the gay community and the networks have the ability to market extremely efficiently, thanks to the effectiveness of viral marketing campaigns. (Here! says it has already achieved a 90% recognition rate within the gay community).

“I think there’s room for more than one gay network, if they’re sufficiently differentiated and done correctly,” says Chuck Bachrach, media director of California ad agency Rubin Postaer and Associates.

But it’s likely that many advertisers will view the networks with some caution.

Many don’t buy time on new networks until they get a good look at the programming, regardless of the format. And most look for a critical mass of subscribers before they make commitments. Logo may have an edge, given the advertising sales clout of MTVN, but its mid-year launch could present a challenge.

“Most advertisers’ budgets will be allocated by then, so they might have some lean times before Jan. 1 rolls around. I would look at them during the first quarter of 2006 to see what comes in then,” says Howard Buford, president and CEO of gay-focused ad agency Prime Access.

Logo is hoping much of the controversy generated by its launch will have blown over by then.

“TV is not a shrine of sacred holy writ, it reflects our society,” says Bob Witeck, CEO of gay marketing firm Witeck-Combs Communications. “Advertisers are about one thing — they want to connect with culture. [When it comes to advertising], we’re talking about capitalistic acts between consenting adults.”

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