Diginets Hit the Screen

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Original and acquired films have long been programming staples for many basic-cable networks. But with digital technology offering greater carriage for niche-based networks, industry observers say branded, ad-supported movie channels may have enough appeal to carve out their own piece of the digital pie in the near future.

But others aren't convinced that new, standalone movie services will have enough box office appeal to draw viewers and advertisers without some original specials or series to help them shine in the crowded digital environment.

Leveraging A Legacy

When Crown Media Holdings Inc. launches its Hallmark Movie Channel digital service in 2004, it will join Lifetime Movie Network, AMC and Fox Movie Channel as ad-supported services that devote the vast majority of their respective lineups to films.

Hallmark is hoping to capitalize on the company's family-values brand not only to attract viewers, but to appeal to operators looking to offer differentiated programming.

The network will feature movies from the vast Hallmark movie library, which also includes such miniseries as Moby Dick
and Gulliver's Travels.

"What we see is the cable industry looking for digital drivers for the new digital plans that they are offering, so there's a demand for compelling programming," said Hallmark executive vice president of programming David Kenin.

The concept of standalone movie services has some merit for advertisers if the brand is strong and the programming tailored and targeted to a specific demo, according to Bill Carroll, vice president and director of programming at rep firm Katz Television Media Group.

"Any showcase that will allow you to place advertisement where it is perceived by the viewer as a positive environment, ultimately that's a good thing for an advertiser," Carroll said.

Certainly, Lifetime's powerful brand position among women has boosted the value of Lifetime Movie Network, which is currently in 40 million homes. Original movies have always performed well on Lifetime, making the network's extension a natural fit.

"From our perspective, developing a service that gives women access to movies 24 hours a day, seven days a week was almost a no-brainer," said Lifetime Entertainment Services executive vice president and general manager Rick Haskins.

LMN — which showcases a mix of original and acquired movies — provides more options for its targeted audience of women 18 to 49, and they have responded. The network averaged a 0.6 household rating in primetime during the third quarter, even with last year's numbers.

"Lifetime [Television] is the No. 1-rated network with women and Lifetime Movies is No. 2," Haskins said. "I think you give to the viewer what they want, whether it's original or whether it's acquired."

Still, some distributors aren't convinced that standalone movie channels — particularly those derived from established basic networks — can attract more eyeballs than already subscribe to cable or satellite.

"Is it really compelling to us to add another movie channel that may have movies that you can get on other channels?" asked DirecTV Inc. senior vice president of programming acquisitions Michael Thornton. "It's hard for me to see what such networks bring to the table."

Nevertheless, Thornton admitted that movies are big ratings drivers and given significant viewer demand for films, such standalone services can help sate more of their viewing desires.

"I don't know of anyone who said that any one of the [24-hour movie channels] are their favorite channels, but I'm sure there a lot of people who expect them to be on the dial," Thornton said.

Movie Madness?

Other industry executives question whether an all-day smorgasbord of movies is enough to satisfy the appetites of both hard core and casual movie fans.

Some executives believe that providing an appetizer of attendant originally produced programs to supplement the movie lineup is a more valuable service to operators, viewers and advertisers alike.

After years of offering commercial-free classic movies, AMC several years ago evolved its programming service to include more original specials and documentaries based on Hollywood. With original series like its debate show, Sunday Morning Shootout, and specials like Women on Top, which profiles female actresses and producers in Hollywood, AMC is attempting to broaden its reach beyond the movies, according to Rainbow Media Holdings Inc. national ad-sales president Arlene Manos.

"We've evolved and expanded the palette of what we do because our viewers are really movie people," said Manos. "We wanted to be able to provide them with various experiences, all connected to movies,"

The move has helped the network's ratings, as AMC's 0.8 third-quarter household mark was up 14% over the same period in 2002. Manos said such programming has also helped attract more advertisers to the channel, but declined to provide revenue specifics.

"Advertisers are always looking at original programming as a mark of a developing network; they see this as a sign of progression and vitality," Manos said. "Original programming is a big thing, and if we can still keep our core as movies and provide extra information it's great for the viewer."

(AMC's move away from classic-movies format to one featuring more contemporary films is at the center of a lawsuit in which the programmer has sued Time Warner Cable to bar the MSO from terminating its carriage agreement.)

Hallmark's Kenin confirmed that the Hallmark Movie Channel will eventually offer some original non-movie content, but said that such programming isn't vital to the success of the channel. He added original series and specials are not guaranteed ratings winners and don't carry the long shelf live that movies do.

"While [original programming] is attractive and important for the advertising community and cable subscribers, it's not what makes the viewers turn to the network, Kenin said. "Just because it's original doesn't mean the audience will support it."

LMN currently offers original interstitial programming, dubbed "Lifetime Movie Network goes Hollywood." The interstitials, which run between the features, tout upcoming movie releases, with interviews with the stars themselves.

But Haskins said that advertisers are more interested in the movies than any other original content on the network.

"Advertisers really click with that and we find that movie studios like Lifetime Movie Network because our core audience loves movies, so it's a one-stop shop to capture those type of viewers," he said.

As for viewers, Haskins said exclusive movie content is more appealing than ancillary original series and specials.

"What's important is that you can provide exclusives," he said. "Lifetime Movie Network, one out of every three of four movies are exclusive — the viewer doesn't necessarily care whether it's a big theatrical or not. They care about the movies they like and giving them exclusive movies is providing the viewer what they want."

Future Film Nets

While there are only a few ad-supported movie networks today, executives expect more to pop up as companies with huge movie libraries look to leverage their assets. NBC chairman Bob Wright has already hinted about potentially launching a digital network based on the Universal Studios library, once the proposed General Electric Co.-Vivendi Universal Entertainment deal goes through.

Lifetime's Haskins certainly expects other companies to play in the digital-cable movie space in there near future.

"I don't think these things are going to go away. I think people love movies and I think that what we find interesting is that even on nights with huge movie competition, it seems like the audience grows and more people come in," he said.

As cable continues to expand its distribution platforms to encompass broadband and video-on-demand, Carroll said that all-movie networks could flourish.

"As we see more platforms, I think we'll find more ways to expand the brand," Carroll said.

"The question will be, is there enough interest and is there enough product to support it?"

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