Forum: Think Beyond the Deal to Provide Value

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Now is the time when programming networks must reach beyondthe conventional and look to build upon our relationships with our affiliates.

It is no longer 1985. This is no longer just thecable-television industry. It is 2000. The business has changed. Our companies havechanged, and we as programming networks need to evolve in order to remain in a position toadd value to our affiliates.

As operators and other distributors today begin to expandtheir collective product offerings, it is imperative that all of us in the contentbusiness support their endeavors.

We must creatively and effectively partner with ouraffiliates in this process to ensure three things: that the products and servicesdeveloped reflect and address a demand in the marketplace; that they be deployed andmarketed effectively; and that they ultimately result in greater consumer satisfaction andeven higher perceived value.

Whether it's the deployment of digital cable, theintroduction of cable modems or the launch of some yet-to-be-conceived product, we have anopportunity to assist our affiliates in the development of revenue streams that cansignificantly add to their success.

The partnerships that we have built on the linear side ofour business can and must be extended. These partnerships will support the underlyingvalue of our core television networks and the new businesses of our affiliates.

Make no mistake, this is not about the renegotiation ofprogramming contracts. It is about the extension of a solid relationship between twoentities that have worked together over the years to forge a business -- entities that arenow in a position to build even more.

LOOKING BEYOND THE DEAL

As programmers, it is essential that we look beyond thedeal to change our perspective on what we're looking for and how we hope to achieveit. As true partners, we must be willing to sit on the other side of the desk and see theworld through our affiliates' eyes. If we do, what we'll see is a changinglandscape, a wealth of upside and some very creative partnering opportunities.

And this partnering must take place throughout the lifecycle of any new product we bring to market, from conception and development, through thelaunch and beyond.

Consider the resources at our disposal: specific researchdata; innovative programming and content departments; state-of-the-art productionfacilities; world-class marketing minds. These are all of the things our partners will belooking to utilize as they explore new ways to leverage the opportunities presented bythis changing landscape.

There are a number of product-deployment initiatives thatoperators are attempting to cultivate. Cable modems and digital cable are just twoexamples. Both will be essential elements in defining our affiliates' ability toremain vital telecommunications providers in the near and distant future.

Our ability to partner with affiliates as they roll outdigital services, modems and other new products will also go a long way toward definingour future relationships with them.

DRIVING DIGITAL

What do I mean by creative partnering? Consider just oneexample: At ESPN, we are helping affiliates to deploy digital cable by using ESPN-TheMagazine as a value-added incentive.

By subscribing to digital cable, customers receive one-yearsubscriptions to the magazine. In addition, our affiliate-marketing department producescustomized 30-second TV spots using SportsCenter talent, and it develops an entiredigital campaign for the market or markets, should the affiliate so desire.

The net result is a more effective rollout of the product,a deepening of the working relationship between ESPN and our affiliates and, of course, agreater perception of value on the part of the consumer.

And ESPN is by no means unique in this regard. Othernetworks are doing similar things with their affiliates.

Discovery Communications Inc. has an innovative programusing Internet content. A&E Television Networks is leveraging its Biographyfranchise to great success. Nickelodeon uses its magazine and other elements to add valueto the highly desirable youth demo. And MTV Networks is providing operators with multipleopportunities to partner with its powerful family of brands.

And this doesn't even begin to address the educationalinitiatives that the industry has launched. These include the C-SPAN bus, Cable in theClassroom, electronic field trips and dozens of other resources that programmers havedeveloped -- all of which, when combined with the local presence of the affiliate, addvalue in the consumer's mind.

THE NEED FOR SPEED

On the cable-modem front, we know two things for certain:Consumers want speed, and they want rich content. And those are two things this industryis perfectly positioned to deliver.

Cable modems, provided by the affiliates, mean speed, whichresearch indicates is a significant point of differentiation in today's marketplace.Meanwhile, programmers provide rich content that is not only in demand today, but thatpromises to be so for as long as people seek to be informed or entertained.

All hype aside, consumers are dying for products, servicesand content to help make the Internet meaningful to their lives. And just as wecollectively redefined television in this country, the companies that make up thisindustry have a golden opportunity to partner yet again in the Internet revolution.

DRIVING VALUE

At the end of the day, it all comes down to one thing:finding innovative ways to increase the value of our products and services.

As the affiliate's menu of services becomes moresophisticated and more consumer-focused, a strategic partnership with that affiliatebecomes tremendously more valuable for the innovative programmer.

As the programmer's expanding brand increases instrength across a growing number of platforms, it becomes an even more valuable marketingtool for affiliates.

And as the consumer interacts more and more with theaffiliate's service and invests more and more time with the programmers' brand,his perception of the value of his subscription services increases not incrementally, butexponentially.

The prospect of utilizing a network's brand extensionsto drive value in other areas is a classic win-win, with the ultimate winner being theconsumer.

A NEW DAY

In today's ever-changing environment, programmers needto rise to the challenge and think beyond the four corners of the documents that governour traditional businesses. We need to step outside of the limitations of what once wasand consider what could be.

Our affiliates are evolving their businesses rapidly, andthe era of just negotiating traditional distribution licenses has come and gone.

We need to get to know their operations in ways we neverhave in the past, for the better we understand their businesses, the more dimensions wecan add to our relationships.

Do we merely want to sell programming to affiliates? Or dowe want to explore the unique ventures they've launched in retailing,telecommunications, high-speed Internet and other new media? Do we simply want to renew acontract today, or do we want to try to find creative ways to build both of our businessesfor years to come?

Content providers are in a great position to help ouraffiliates to expeditiously roll out new products that will support our core brands, ouraffiliates' positions in the market and, most important, our collective value to theconsumer.

Sean Bratches, a 15-year veteran of the cable industry, issenior vice president of affiliate sales and marketing for ESPN.

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