Technology

TV Guide Channel Renamed a 'Network’

4/27/2007 8:00 PM Eastern

Distancing itself from its program-guide roots, TV Guide Channel will undergo a subtle name change next month to reflect its ramped-up commitment to original programming.

In the rebranding, TV Guide Channel will become TV Guide Network on-air June 4. It plans to celebrate its new, tweaked moniker with a big relaunch bash, featuring American Idol runner-up Chris Daughtry, at The Cable Show in Las Vegas next week.

The name change is “on strategy with what we’re trying to convey to cable operators, advertisers and, equally importantly, consumers,” TV Guide Network president Ryan O’Hara said.

In terms of marketing, a switch to “network” from “channel” in a name may seem like a tiny adjustment. But O’Hara said that the rebranding underscores the service’s ongoing transformation into a purveyor of entertainment content, rather than just a utility that offers on-screen local TV listings.

Gauging TV Guide Network
Distribution and ad sales are on the rise, unlike license fees from distributors.
2002 2003 2004 2005 2006
Year-End Subs * 56.8 57.2 76.7 77.4 80.2
Net Ad Sales ** 73.7 79.1 87.8 97.1 103.6
License-Fee Revenue ** 20.6 20.9 25.2 22.4 23.4
Ave. License Fee [$] 0.03 0.03 0.03 0.02 0.02
24-Hour CPM [$] 1.87 2.27 2.87 2.90 3.18
* Subscribers (in millions)
** Dollars (in millions)
Source: SNL Kagan

STRESS ON PROGRAMMING

“We like the name TV Guide Network because it definitely conveys that we’re a programming network, straight forward and clear,” O’Hara said. “With a lot of networks it might not matter, the nuance between 'channel’ and 'network.’ They’re pretty close. For us, I felt that 'network’ conveyed programming, and we’re really working hard to let people know that we’re about great programming.”

TV Guide Network has ratcheted up its original-programming efforts in an effort to offset defections from digital viewers who have turned to interactive program guides; and because it needs to increase ad sales, facing fairly flat fees from distributors.

Searching for breakout shows to define its brand, the network will add two original series to its lineup this summer. One of them, America’s Next Producer, is from the executive producer of the reality TV blockbusters Project Runway and Top Chef.

TV Guide Network made several moves in the past month to bolster its schedule, including signing actress and fashion aficionado Lisa Rinna as the new host for live red-carpet coverage at awards shows, replacing the mother-daughter duo of Joan and Melissa Rivers.

“She [Rinna] fits really well where we’re taking the channel and the brand,” O’Hara said, adding that she will appeal to a younger audience.

'CELEBREALITY’ ADDITIONS

In a big acquisition for the network, TV Guide Network in April secured exclusive rights to a group of VH1 “celebreality” shows — including The Surreal Life, Flavor of Love, My Fair Brady and I Love New York — starting in July.

“In one fell swoop, we were able to acquire a lot of really good product,” O’Hara said. “It adds a lot to our late-night blocks.”

To be more viewer-friendly, in June TV Guide Network is also reducing the number of local ad avails that it gives affiliates, trimming them to three minutes from 10. And during this upfront, TV Guide Network, which has seen explosive carriage growth, is trying to broaden and expand its roster of national sponsors.

“As we become more of a programming service, and are really seen as a leading programming service, there is tremendous opportunity to do more business with blue-chip advertisers,” O’Hara said.

Growing ad-sales dollars is crucial for TV Guide Network, which generated roughly $130 million in revenue last year for parent Gemstar-TV Guide International.

Although it has seen a huge increase in carriage — to 81 million from 57 million homes in 2003 — the network’s monthly, per-subscriber license fee this year is expected to average just three cents, up from two cents last year, according to research firm SNL Kagan.

TV Guide Network has long-term carriage deals that only permit cost-of-living increases from distributors, Gemstar-TV Guide said in a securities filings. Most of TV Guide Network’s future revenue growth “is highly dependent” on ad sales, it said.

Advertisers buy a TV network’s audience, and TV Guide Network faces some unique challenges not only attracting new viewers, but hanging on to current ones.

As customers upgrade to digital TV service from analog, even if they’ve historically used then-TV Guide Channel, they often switch over and use interactive program guides to search for programming, O’Hara said. That’s siphoning viewers from the network.

And, in an ironic twist, TV Guide Network is essentially competing for viewers against interactive guides that are its corporate siblings. The network’s parent, Gemstar-TV Guide, is a major player in the IPG business.

“In a digital home, the IPG is many times the utility of choice to search for television listings,” O’Hara said. “From a company perspective, we are all for that, because in the IPG space we’re [Gemstar-TV Guide] the leader and we’re proud of our products, and our intellectual property, and everything we bring to that equation.”

So TV Guide Network is using original programming — and jazzing it up — to lure digital subscribers back, giving them content to look at, rather than just TV listings.

“That’s why you see us being so aggressive and innovative on the programming side, because we know in digital homes, the programming is the key to the network more so than the scroll,” O’Hara said. “In homes that are analog — and there are still a lot of analog homes — the usage of our scroll is enormous. Even if they only have 40 to 60 analog channels, they still need to know how much good programming is within those channels and what to watch.”

ORIGINALS CAME IN ’05

In early 2005, TV Guide Channel began shifting in earnest from its roots as an on-screen program guide, adding original programming and shrinking the customized rolling TV-listings scroll.

Today, the program scroll comprises only about a quarter of the screen, with the other three-quarters carrying programming.

TV Guide Network currently has a lineup of 10 original series, including Idol Tonight, an exclusive pre-show to American Idol.

The network is making an especially big bet on original content this year. On June 13, it will debut Making News: Texas Style, a 13-episode reality series about a TV station’s local news operation in Midland-Odessa, Texas.

“These people are as passionate about trying to win a couple of ratings points in Midland, Texas, as the people working at the broadcast networks trying to figure out how to win the fall season,” O’Hara said. “It’s the real Anchorman.”

A month later, July 18, TV Guide Network premieres what it hopes will be its marquee series, America’s Next Producer. It’s a 10-episode competition show executive-produced by Magical Elves, which has also executive produced Project Runway, Top Chef and Project Greenlight.

TV Guide Network met with more than 10 top reality-TV producers in Hollywood, according to O’Hara, before choosing Magical Elves and America’s Next Producer.

“They wanted to try to push the envelope of what people think of as a TV Guide Channel show,” said Dan Cutforth, co-founder of Magical Elves. “They came to us saying they wanted to create a new show that could kind of take their network in a new direction. To have an opportunity, whether we succeed or fail, to create a signature show for a network is huge. It’s a great challenge and it’s a great opportunity.”

FIRST-LOOK CONTEST

The winner of the competition — who will be judged on his or her ability to create “compelling” TV programming in a variety of genres — will receive $100,000 cash, a production office in Hollywood and a first-look deal with TV Guide Network.

“We’re investing good resources in this show,” said O’Hara, a veteran of News Corp., which owns 41% of Gemstar-TV Guide. “We’re going to market it well. These are great partners. I can’t imagine a show that’s more on-brand for us, and a show you can have greater creative minds working on.”

O’Hara said the network’s programming strategy has been working, and is compensating for the impact of more consumers taking digital TV service with interactive guides. But it’s an ongoing battle.

“There are a certain number of people we’re going to lose quarter in and quarter out — in situations where they becomes a digital home and they now have an IPG — and they’re just not going to use the [TV Guide] scroll as much,” O’Hara said. “If we stood still, we would probably have negative ratings growth. What’s great is the programming is working to a degree where it’s stabilizing that migration bleed, which is real.”

TV Guide Network’s total-day and primetime household ratings have been flat so far this year, at 0.2 and 0.3 in the first quarter, respectively — the same numbers as the year-ago period, according to a Disney ABC Cable Networks analysis of Nielsen Media Research data.

In a securities filing, Gemstar-TV Guide said that TV Guide Network’s ratings are staying stable because viewers are staying tuned to the network for longer periods of time.

“We believe the increase in length of tune and average minutes viewed is related to our increased investment in programming for the channel,” Gemstar-TV Guide said. “Ultimately, we believe our programming investment will lead to increased viewership from our total distribution — analog cable, digital cable and [direct broadcast satellite] households.”

Length of viewer tune-in is up 14% across the board this year, to six and a half minutes from 5.7 minutes, according to O’Hara.

TV Guide Network’s original-programming strategy has won applause from some affiliates.

“I’m really pleased that they’ve invested in the product,” said Patrick Knorr, general manager of Sunflower Broadband in Lawrence, Kan. “I think the changes with getting content on the TV Guide Channel has been a good move and created more value for that channel.”

LOCAL ADS CUT BACK

So there will be fewer commercial interruptions for viewers, TV Guide Network is reducing the number of local avails it gives to cable operators, moving to three minutes from 10 minutes per hour.

“Most networks do two or three minutes of local avails, so we wanted to get within the range that really made a lot of sense,” O’Hara said. “A lot of people weren’t inserting [ads]. There was just far too much product to effectively sell.”

“Every second of that seven minutes [of former local avails] is going into programming,” O’Hara added.

At least one affiliate — Jenny Mitchell, Cable One’s regional ad-sales manager in Texarkana, Texas-Ark. — isn’t worried about losing part of her TV Guide Network ad avails.

“It was really nice to have that extra inventory, but I don’t think its going to hurt our money, because I think the cost of [the remaining TV Guide] inventory will very quickly go high,” Mitchell said. “When you have that many avails, a lot of advertisers thought that maybe could be a turnoff.”

Gemstar-TV Guide reported $129.25 million in revenue from TV Guide Network last year, up 4.2% from $124.1 million in 2005. That increase was mainly due to higher prices for national ads.

Most of the network’s revenue was from ad sales. Net ad revenue was $103.6 million in 2006, versus $97.1 million the prior year, according to SNL Kagan data. License-fee revenue in 2006 was $23.4 million, compared with $22.4 million in 2005, SNL Kagan said.

TV Guide Network’s CPM, or cost to reach 1,000 viewers, last year was $3.18 on a 24-hour basis, according to SNL Kagan.

As such, the network has one of the lowest CPMs among networks with more than 80 million subscribers and among entertainment-focused cable networks, according to O’Hara.

That is why TV Guide Network this upfront is telling advertisers they will get their best bang for the buck on the network.

“Our CPMs are artificially low because of where we’ve come from,” O’Hara said.

RV INTEGRATION

That’s one reason why Go RVing, a promotional campaign for recreational vehicles, bought a sponsorship on Idol Tonight that integrated a motor home into the show, according to Gary LaBella, Go RVing’s president of public relations and advertising.

“We bought an Idol Tonight package,” LaBella said. “We’re a sponsor on the American Idol telecast on Fox, and we thought this would be a great way to have an effective extension of our American Idol buy, reaching hundreds of thousands of the loyal American Idol fans at a much more affordable price at the TV Guide Channel than at Fox.”

September
October