Under its new ownership structure, Game Show Network will use more "relationship-oriented" programming to draw in younger viewers, officials said last week.
During a conference call with analysts, Liberty Digital Inc. discussed its purchase of a 50 percent stake in GSN, a deal that closed recently, as well as its plans for the programming service.
Liberty Digital has made a heavy investment-about $8 million per year-to develop interactive-television services, according to president and CEO Lee Masters. But it's also focusing on the creation of more present value and revenue for its assets, Masters said.
As more sophisticated ITV applications become available and workable, they can be "layered" onto GSN-which is nearly in the black-as well as Digital Music Express, Liberty Digital's music-delivery service, Masters said.
That means Liberty will use such traditional home-shopping methods as an 800 number to sell goods like compact discs on television through DMX. It also means lowering GSN's audience demographics to attract more 18-to-49 year olds and ramping up its distribution, according to Masters.
GSN already airs a block of relationship shows from 4 p.m. to 6 p.m., Masters said.
Last week, the network unveiled its development slate during its upfront presentation to advertisers. GSN's goal is to have a schedule of 50 percent original programming by 2003.
The shows in development-which include interactive elements and will roll out in late spring-are: Shoot for Love,
a dating-game show; a storytelling contest called Hell Yes I'm A Redneck; Billboard Living,
which places teams of contestants on billboards across the country; E-Match,
developed in conjunction with Internet dating service match.com; and Grab That Mic,
an improvisational hip-hop showdown.
Liberty Digital paid $275 million for its stake in GSN, which includes $125 million in cash; a $100 million one-year note and $50 million in Class A stock. The network now has 33 million subscribers and is adding homes at a clip of 5 million per year.
"It's very close to break-even, and the [management] team has done a fabulous job of growing distribution," Masters said.
GSN generated $50 million in revenue last year and will average 40 percent yearly revenue growth for the next three to five years, Liberty Digital executive vice president and chief financial officer Mark Rozells said.
Sony and Liberty have also each committed $37.5 million to speed the network toward break-even within the next three years.
Liberty Digital is in the process of hammering out the details of its access agreement with AT&T Broadband, which would give it control of a 6-megahertz channel on the MSO's cable systems.
"What we're trying to do is fill in the blanks and answer some of the questions that were not fully developed in the agreement," Masters said. "We're formalizing, clarifying and solidifying the details of how that agreement works."
Among the issues being addressed are "the question of what do the economics look like?" or whether the Liberty Digital services would get "full digital distribution on advanced set-tops," Masters said.
"The way it [the access agreement] is written, there are some ambiguities," he said.
Liberty Digital is looking to develop 12 to 15 interactive channels that would be carried via AT&T Broadband's bandwidth and by other distributors. The first is an interactive travel channel it is planning to develop with Travel Channel owner Discovery Communications Inc.
Though Masters praised GSN's current management team last week, Liberty Digital and Sony have talked to some outside executives about joining the network, including former Fox Family Channel president Rich Cronin.