Fox Family Channel is banking that its latest program
rejiggering will shore up its plummeting ratings, which recently resulted in Fox
Broadcasting Co. giving the network's parent a $125 million infusion.
Fox Family Worldwide Inc. -- a partnership of Saban
Entertainment Inc. and News Corp.'s Fox Broadcasting -- disclosed in a recent Securities
and Exchange Commission filing that it had received the cash in order to satisfy the
covenants of its $710 million in bank loans, avoiding technical default on the debt.
The financial situation underscores the fallout of the
cable channel's ratings woes since Fox Family partners Haim Saban and Rupert Murdoch
acquired The Family Channel for $1.9 billion from evangelist Pat Robertson and his
International Family Entertainment Inc. in 1997.
Under the helm of president Rich Cronin, Fox Family totally
scrapped its lineup last August, replacing it with new, original programming to try to
attract families, teens and kids.
But the transformation, while drawing younger viewers,
still resulted in Fox Family suffering ongoing double-digit ratings declines. In the third
quarter, for example, Fox Family's primetime ratings dropped 31 percent, to a 0.9 from a
1.3 in the third quarter of last year, according to Nielsen Media Research.
"The network has been running below our
expectations," Fox Family Worldwide president Mel Woods said. "We are definitely
dissatisfied with the ratings. We took a big bite out of the apple when we tried to make
all of the programming changes at once."
But Woods added that the new strategy -- replacing the old
Family Channel's off-network reruns, which attracted an audience of 50 and older -- is
still sound. Fox Family is now attracting advertisers that it never had before, like auto
companies, he added.
'The older-skewing programs that The Family Channel used to
run were a dead end," Woods said. "But the problem is that we haven't hit our
stride yet with the ratings."
Earlier this year, Fox Family hired Cartoon Network veteran
programmer Rob Sorcher to retool the channel's programming, and a new schedule was
instituted for the fall.
Fox Family Worldwide's other TV outlet, broadcast's Fox
Kids Network, has also seen a hit in its ratings.
Woods downplayed the long-term significance of the $125
million infusion from Fox Broadcasting. He said he considers the infusion as
"quasi-equity," and not debt, since it is subordinated to everything else on Fox
Family Worldwide's balance sheet.
He added that he was surprised to see Fox Family's bond
price drop after the SEC documents were filed, since he considers the $125 million from
Fox Broadcasting to be a vote of confidence and a sign of its commitment to Fox Family.
Nonetheless, cable-industry insiders continue to say that
Murdoch is particularly unhappy with Fox Family's ratings declines. But Woods denied that.
"News Corp. has said all along that it supports this
company," he said. "Rupert considers it an important part of his business."
Saban Entertainment is holding a
"peak-performance" summit Nov. 2 in Beverly Hills, Calif., to discuss new shows,
marketing promotions and merchandising opportunities with the press.