Country Music Television has taken pains this summer to
distinguish itself and to prove that country-music-video networks aren't all created
But the network continued to suffer major defections of its
cable affiliates during the past few months, losing between 900,000 and 1 million
subscribers to its upstart rival, Great American Country.
CMT just finished airing its highest-profile
live-programming event to date, Farm Aid '98. In fact, it negotiated a
five-year deal to televise Farm Aid, with this year's concert marking the first year
of that pact, according to Paul Hastaba, the network's general manager.
Farm Aid previously aired on CMT's bigger sibling at
CBS Cable, The Nashville Network.
"It's been a publicity dream for the
network," Hastaba said. "It's really had a positive impact and created a
buzz with cable operators."
Yet even as CMT was crowing about its success with Farm
Aid '98 and touting its new original programming, the network was still bitterly
battling with GAC over subscribers and disputing some of GAC's claims about its
CMT did score a big win last month, when
Tele-Communications Inc. in Seattle-Tacoma, Wash., began rolling it out. During a
three-year period, CMT will gain roughly 1 million subscribers with that launch -- one of
the biggest in the network's history, officials said.
For its part, GAC -- which is offering operators modest
launch fees, free carriage and equity in the network -- said that from June through
September, it has gained more than 1.1 million subscribers as a result of CMT switch-outs.
CMT pegged its subscriber losses to Jones International Inc.-owned GAC during that span at
Prior to June, CMT had lost roughly 1 million subscribers
to GAC, bringing its total subscriber defection to GAC in 1998 so far to roughly 2
Despite GAC's offensive, CMT is still a growing
network, at roughly 42 million homes.
But GAC is continuing to get its licks in. For example, in
September, Seattle-based MSO Northland Cable Television Inc., with 220,000 subscribers,
switched out CMT for GAC across its systems, according to GAC president Jeff Wayne. CMT
claimed that it was being carried in only 110,000 homes. Northland officials couldn't
be reached for comment.
The latest switch-out will come this week, Oct. 15, when
TCI in San Jose and Campbell, Calif., representing 180,000 subscribers, is set to replace
CMT with GAC, TCI officials said. In the ongoing dispute over numbers, CMT claimed that it
is only carried in 169,000 homes in that system.
During the summer and early fall, GAC has continued to gain
400,000 to 500,000 subscribers per month, Wayne said. The majority of those subscribers
have come at the expense of CMT, due to switch-outs, he maintained.
GAC is now at 5 million subscribers, and it expects to hit
6.5 million to 7 million by the end of the year, Wayne said.
"We have not lost one cable system in 1998," he
said. "If anything, we've gained momentum this year."
During the past four months, according to GAC, it has
gained carriage from CMT switch-outs in Time Warner Cable systems in Bakersfield, Calif.;
Birmingham, Ala.; and Akron-Canton, Ohio. The same applied to TCI systems in Santa Cruz,
Calif.; Middletown,Ohio; Peoria, Ill.; Tulsa, Okla.; and La Crosse, Wis.
Comcast Corp.'s system in Richmond, Va., with 70,000
subscribers, switched out CMT for GAC, Wayne said. And two other Comcast systems -- in
Indianapolis and Fort Wayne, Ind. -- have launched GAC. Those were not CMT switch-outs.
Comcast couldn't be reached for comment.
CMT officials essentially claimed that GAC is exaggerating
and trying to give a false impression about its gains at CMT's expense.
Lloyd Werner, executive vice president of sales and
marketing for CBS Cable, agreed that since the start of the year, CMT has lost 2 million
subscribers to GAC, with roughly 500,000 of those from TCI and another 500,000 from Time
Warner. But Werner asserted that those switch-outs were tied to corporate deals that those
two MSOs reached with Jones, GAC's parent.
"That's not factual information," Wayne
said, adding that the switch-out decisions were made on the system level, and not on the
corporate level. He also denied that GAC has inflated its numbers when describing its CMT
In other switch-outs this year, CMT lost 200,000 Rifkin
& Associates Inc. subscribers to GAC, as well as the entire subscriber base of MSO TCA
Cable TV Inc., or roughly 700,000 subscribers.
Werner pointed out that TCA received equity, or stock in
JIN, as part of its affiliation agreement with GAC. A JIN junk-bond filing earlier this
year disclosed that TCA holds 101,000 shares of JIN.
According to that filing, two MSOs -- which fit the
descriptions of TCA and Coaxial Communications, both of which also switched out CMT for
GAC -- were also paid $1.2 million in launch fees, or $1 per subscriber, to roll out GAC.
Despite the switch-outs, CMT has grown by 2.1 million homes
from a year ago and by 500,000 from January, Werner said. By year's end, he projected
that CMT will be in 43 million homes. Advertiser confidence in CMT is such that its
upfront revenue increased by 30 percent this year, he added.
Live events such as Farm Aid, creating original programming
and locking in long-term exclusives on music videos are now all part of CMT's
strategy to stand out.
"We're trying to differentiate the product,"
Werner said. "The reason why Seattle decided to go with us is because it's a
better product ... We've made ourselves more important to the viewer."
In Seattle, CMT and GAC were competing head-to-head for
carriage by TCI. Steve Kipp, a spokesman for TCI Northwest, said the two networks were
evaluated on an even plane.
"We felt that CMT had the type of mix of programming,
and not just videos, that was intriguing," Kipp said. "We had a feeling that the
programming that it had was something that the Northwest would like. Seattle is known as
the 'grunge' capital, but country is big here."
Kipp added that CMT also came up in subscriber surveys.
"The brand name was important," he said.
Wayne conceded, "We competed with CMT in Seattle, and
But he argued that GAC's loss had to do with the fact
that CBS owns a major country-music radio station in Seattle, WUSN, which offered a lot of
promotional opportunities for CMT and TCI.
In San Jose, where CMT is being switched out, TCI officials
said they were bringing on GAC because it played more videos and fewer nonmusical programs
-- even as CMT is touting its new original shows.
"Our consumer research showed that GAC is testing
better than CMT because there are more videos on GAC, as opposed to a mix of programming
on CMT," TCI spokesman Andrew Johnson said.
CMT thought differently, saying that its original shows are
an attraction. "When all things are equal [when an operator is weighing which of the
two networks to carry], it breaks the tie," Werner said.
This summer, CMT debuted CMT Hit Trip, an original
weekly series with an edge that is aimed at a younger audience, Hastaba said. The show
reports on what's new in cities nationwide. Also, in August, CMT launched a series of
Video specials, kicking off with Shania Twain.
In addition, the network will premiere a new live one-hour
concert series, CMT All Access, Oct. 27, with a show by Travis Tritt. There will be
five installments of CMT All Access next year.
And to buttress its programming lineup, CMT is negotiating
with several record labels to secure long-term exclusive video deals with several major
"We will contract to have 40 exclusive music videos
per year," Hastaba said. "And we'll get a two-year exclusive for each one
that we negotiate."
However, Wayne claimed that CMT hasn't made much
headway in country-music hub Nashville, Tenn., with its push for exclusivity.
"It's a strategy that's not going to
work," he said. "The sentiment among the record labels is that exclusivity is a
bad thing. It doesn't serve their artists well."
If a record label gives exclusivity for a video to CMT,
that means that the clip won't air in markets where only GAC is carried, such as
Cincinnati, San Jose, Richmond, Va., and others, Wayne said.