Digitals Local Flavor

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Call ittheTip O'Neill strategy.

Much as the former House Speaker said, "All politics
is local," digital networks are finding that they have to take the same tact -- at
least for now -- as they try to create demand for their products.

That's a tricky task when only a tiny portion of
consumers across the country can actually get your product, as cable programmers launching
digital networks have found out. The traditional strategies for kicking off and promoting
analog channels -- such as broad consumer-ad campaigns and airing cross-channel
promotional spots nationally -- don't necessarily work for digital, many
cable-network executives said.

Programmers don't want to create a demand for digital
networks when MSOs are only starting to roll out the digital set-tops that make it
possible for consumers to actually get these new niche services.

"You don't want to raise frustration on the
consumer side," said Lori McFarling, vice president of affiliate marketing for
Discovery Networks U.S. "You don't want them saying, 'I'm hearing
about this great digital network, and I can't get it.'"

That's the same concern at MTV Networks Inc.

"You don't want to create an expectation that
your partners [MSOs] can't deliver on," MTVN president Mark Rosenthal said.
"What is an issue is the availability of the [digital] boxes."

As a result, at this stage of digital deployment, many
programmers said there is only one way to market digital networks to consumers: local,
local, local. MTVN and Discovery -- which are both set to launch digital networks this
summer -- and, to some extent, Disney Channel are taking a market-by-market approach,
using custom marketing campaigns designed for specific cable systems, to hawk their new
digital networks to subscribers.

"All of our marketing is completely local,"
McFarling said. "And you have to get in front of the consumer in a nontraditional
way."

According to Rosenthal, "It has to be on a
market-by-market basis."

Discovery has already launched four digital networks as
part of its "showcase" channels: Discovery Home & Leisure, Discovery
Science, Discovery Civilization and Discovery Kids. This week, Discovery premieres
Discovery Wings and Discovery Health.

MTVN rolls out "The Suite" -- six
digital-music-video channels from MTV: Music Television and VH1 -- July 31. And in
January, MTVN will add Noggin, an educational kids' channel, to its digital lineup,
along with three other Nickelodeon spinoffs. MTVN will offer all 10 services via a single
satellite transponder.

On a market-by-market basis, Discovery is trying to
accomplish two goals with consumers in terms of digital, according to McFarling. The first
is to educate the public about digital, which means positioning it as not just more
channels, but as a much more convenient way of seeing television.

"How do you drive the box?" she asked. "That
is the first goal."

Second, "you bring in the programming to back that
up," McFarling added.

As part of its marketing push for its digital channels,
Discovery is now crafting barker spots that operators can run on local avails, McFarling
said. The spots can be custom-tagged, and they might say, for example, referring to Wings
or Health, "There's a new 24-hour network, and it's only available through
TCI [Tele-Communications Inc.] on digital cable."

Discovery also plans to offer cable operators access to its
massive database on subscribers to its various networks, helping MSOs to market digital on
a local basis.

"We'll partner with operators and tell them that
we'll help them to do segmented marketing to the great fans of Discovery,"
McFarling said.

Discovery has several initiatives to help consumers
"touch" its brands, in terms of digital in general and its new digital networks.
For example, Discovery is just starting to put digital hookups in its retail stores, so
that consumers can get a gander at digital first-hand, she said.

For both Wings and Health, Discovery is trying to forge
partnerships with magazines that cover those topics, so that those publications can be
used as platforms to promote the digital networks to aficionados, McFarling said.

As for Wings, which is dedicated to flying and aviation,
Discovery is trying to promote the network by going to places where "enthusiasts for
our brand" can be found, McFarling said. So, Discovery is exploring air shows that
are held across the country, and it may create booths or kiosks for Wings at them.
Discovery is also working with a company to create CD-ROMs that will re-create flight
simulations and dogfights, which will be used to promote Wings.

In the case of Health, Discovery has begun talking to
health organizations to try to build partnerships with the new network, McFarling said.

For its rollout of The Suite in markets across the country,
MTVN is using as its model its launch of M2: Music Television -- which will actually be
the anchor network of The Suite -- to 70,000 MediaOne subscribers in Jacksonville, Fla.,
according to Rosenthal. In that rollout, MTVN designed an extensive market promotion to
support the network's launch, including special events and tie-ins with M2's Web
site.

"You want to customize, customize, customize,"
Rosenthal said.

To support the network's launch in Jacksonville, M2
and MediaOne hosted a free "TechJam" concert in April that was attended by
nearly 6,000 people. M2 also created a special Web site for the show, where consumers
could register for free tickets and pick them up at a MediaOne kiosk in a mall -- where
they were pitched on cable-modem service.

Generally speaking, in markets where operators are rolling
out The Suite, MTVN will develop an integrated local-marketing strategy similar to what M2
did in Jacksonville. The campaign may include events, as well as tie-ins to MTV's Web
site and to the sites that are being created for each of the themed music-video services
that make up The Suite.

"It's the kind of stuff that marries the
platforms together," Rosenthal said.

Disney Channel launched its spinoff -- Toon Disney, an
animation channel aimed at digital carriage -- in April. Disney now plans to step up
marketing efforts toward consumers for the new Toon channel, said Eleo Hensleigh, senior
vice president of marketing for Disney Channel and Toon Disney.

Disney Channel has already been airing cross-channel promos
for Toon Disney, but, starting in July, it will more aggressively promote the digital
network. For example, on the Fourth of July, Disney will air a day of "Fab Five"
Toon Disney programming, saluting several key Disney characters, Hensleigh said. Then,
throughout the summer, Disney Channel will run a one-hour Toon Disney block of
programming, from 10 p.m. to 11 p.m., Monday through Saturday, Hensleigh said.

And on a market-oriented basis, Disney Channel will promote
Toon Disney during its 10-city "Premiere in the Park" tour, where families are
invited to gather and watch a Disney movie. Toon Disney will set up an "animation
station" at the site of each movie event, "to introduce the idea of the
network," Hensleigh said. Disney will also run a trailer for Toon Disney during the
movie, she added.

Neither McFarling nor Rosenthal envisioned doing any major
consumer ad campaigns for their respective digital networks for some time to come -- even
years.

"We're not in a game of tune-in or ratings,"
McFarling said. "There won't be traditional consumer ads."

Added Rosenthal, "Down the road, we'll run
cross-channel spots nationally. We'll walk -- not run -- into that. And it's not
smart to do national consumer ads. That's not to say that we won't spend to
promote this. But we'll target markets, and we'll spend money to get the biggest
bang."

In contrast, Lifetime Television will run some consumer ads
when it launches its digital spinoff, Lifetime Movie Network, this week at the CTAM
conference in Chicago.

"There will be cross-channel promos and some consumer
[ads] behind it," Lifetime president Doug McCormick said. "We'll be out
there letting people know that there's a Lifetime Movie Network."

But he declined to offer any details, citing competitive
reasons.

Even smaller programmers are offering digital networks, and
they are coming up with specials ways to promote them market-by-market to consumers.
INSP-The Inspirational Network debuted INSP-Digital in early June. INSP-Digital has its
own unique programming, and it isn't merely a simulcast of INSP's analog
network.

Much of INSP-Digital's programming is created by
preachers who have radio ministries and loyal followings. INSP plans to take advantage of
this to market INSP-Digital on a grassroots basis to consumers, according to Joseph Roos,
INSP's vice president of marketing. INSP-Digital is betting that followers of radio
ministers may be willing to buy digital set-tops in order to see their favorite preachers
on television.

"We're just not going to do a blanket
campaign," Roos said. "We're going to do it market-by-market."

INSP-Digital will do direct-mail campaigns to homes
identified from churches' mailing lists in certain markets, for example. INSP-Digital
will also be promoted on some of the radio stations that carry the ministers who appear on
the network, according to Roos.

"There's a huge potential for cable operators to
tap into this inspirational market," he said.

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