McGrath Takes Helm at MTVN

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Now that Judy McGrath has been named Tom Freston’s successor, a big question remains: What does she want to do with her MTVN?

Viacom Inc. co-president Freston last Tuesday selected McGrath, who had been serving as MTV Group president, to replace him as chairman and CEO of MTV Networks, the unit that is home to such stalwarts as Nickelodeon and MTV: Music Television.

McGrath’s promotion, which makes her arguably the top female executive in all of cable, had immediate fallout.

MTVN president, chief operating officer and ad-sales head Mark Rosenthal resigned when he didn’t get the top job. He, MTVN Group president Herb Scannell and Bill Roedy, president of MTVN International, were the other candidates to supplant Freston.

McGrath — taking the position vacated by Freston in early June, when he and CBS Television Network CEO Leslie Moonves were promoted to Viacom co-president after Mel Karmazin left — faces decisions about not only finding someone to take her old spot, but a replacement for the highly regarded Rosenthal.

Her calls, no doubt, will be shaped by how and if she decides to reorganize MTVN.

As MTV Group president, McGrath was responsible for MTV, MTV2, VH1, Country Music Television, Comedy Central and Logo, the gay-targeted channel that is slated to bow next February. Now, she also has oversight of Nickelodeon, Nick at Nite, Spike TV, TV Land and Noggin/The N, properties formerly under Scannell’s purview.

McGrath is also in charge of the MTV Networks Digital Suite, MTV Networks International and all related consumer products and digital businesses.

In a phone interview, McGrath said she had not yet made a decision about who would take her old job or succeed Rosenthal. “I’m going to think about that, but not take too long,” she said. “We have a lot of talented people working in the organization.”

She also dismissed a question about speculation that Comedy Central, Spike TV and Logo might be grouped together. “I don’t think I would necessarily write that,” she said.

McGrath said she had spoken to Scannell and Roedy and both are supportive. She added that she had worked closely with the two executives, as well as Rosenthal, over the past 18 months and “learned a lot about their roles.” She said she has great admiration for Scannell and Roedy and wants to “champion their work.”

Viacom sources said it might be a month or more before McGrath announces executive or organizational changes.

“With Mark leaving and Judy just settling into the job full-time, it’s going to take some time. She has a line of people outside her door,” one company veteran said. “She’s open to discussion and will meet with a lot of different people. You don’t know what she’s going to do. She might not have a COO.”

Many industry watchers, though, see Scannell getting some kind of bump.

“He didn’t get the big job. Some other expanded position, though, is probably in order,” said one network executive.

Viacom observers also point to Van Toffler, president of MTV, MTV2 and MTV Films or Brian Graden, MTV and VH1 entertainment president, as in line for bigger jobs.

“If Judy structures things the same way, you figure it would come down to Van Toffler or Brian Graden taking her old spot; [VH1 general manager] Christina Norman hasn’t been here long enough,” said one insider. “I don’t know if Brian really wants that kind of job. He’s a programmer at heart.”

Comedy Central president Doug Herzog, who returned to Viacom from USA Network in May, could also grab added duties with Spike TV and Logo.

While she assesses matters, Freston said McGrath, who began her MTV career as a promotional copywriter in 1981, was his choice all along, as he had thought about succession plans in the event that he would have left Viacom.

“I knew what I wanted to do immediately,” he said.

While each of the candidates held particular strengths and talents — Scannell as a top programmer, Roedy for his international acumen and Rosenthal for his overall business sense — McGrath has the ability to nurture talent.

“First and foremost this is a creative company. Judy has the ability to recognize talent and get people to come up with the best ideas and work to the best of their abilities,” Freston said.

“Her key is her creative skills,” said GSN president and CEO Rich Cronin, who previously led TV Land and Nick at Nite. “She’s one of the best creative leaders in the industry. She’s also very research-oriented and is always trying to understand the audience inside out.

“So a combination of her own great creative gut and great belief in research I think has been key to her success and the success of MTV and the other networks she’s overseeing.”

Said Oxygen chairman Geraldine Laybourne, formerly the chief of Nick: “My favorite moment of Judy was the first time [Viacom chairman] Sumner Redstone had the MTVN executives talk to analysts. We practiced and practiced. So we get up there for the big conference and Judy stands up and says, 'Obla Di, Obla Da, EBIDTA.’

“It was so great, because no one had created value better than Judy McGrath, but these jargony financial terms to her were just ridiculous.”

The analysts “loved her, because the wackier we were, the more they loved it, because they understood we were our brands,” Laybourne said.

McGrath’s ascension comes amidst a record-setting financial performance by Viacom in the second quarter, fueled in large part by the cable unit. In the second quarter, the cable networks posted an 18% revenue rise to $1.6 billion from $1.3 billion in the 2003 quarter, while operating profits jumped 23% to $608 million from $492.8 million, about a third of Viacom’s $1.45 billion total.

Revenue growth was stoked by a 26% rise in advertising, with MTVN ahead 27% and all of the channels registering double-digit gains. For its part, Black Entertainment Television grew its advertising revenues 23%.

Affiliates fees improved 8% as gains at MTVN and BET were mitigated by a 5% decline at Showtime Networks Inc. Showtime and BET will not be integrated into MTVN, according to Freston.

McGrath, during the phone interview last week, offered the following assessments of some of the networks:

  • SpikeTV has been “successfully repositioned” in targeting men. “It needs more development.”
  • Comedy Central has “really just come into the fold. It needs a chance to build on strong programming like Chappelle’s Show, Reno 911 and The Daily Show With John Stewart.”
  • Noggin, The N: “I love its voice, its point of view, its unique position. I would love to see it grow, get in front of more customers.
  • TV Land and Nick at Nite are in “good stead. They are making good strides with original programming like Fatherhood.”
  • Logo: McGrath said she would be “focusing a lot of attention here in the short term. We’re making connections to the [gay and lesbian] community and with talent. We’re getting close to additional distribution announcements. I’m pleased with progress we’ve made with programming and advertisers.”
  • VH1: “The network has really reawakened under Christina Norman.”

ABOUT ROSENTHAL

As for Rosenthal’s departure, McGrath said she was “very sad. I’ve gotten to know Mark personally and professionally” over the last few years.

Freston acknowledged a “sense that Mark wanted to go,” but said that didn’t delay the announcement about McGrath. “It took longer than I would have liked,” he said, citing unspecified “Viacom issues and internal processes” for the delay.

Relative to Rosenthal’s future, Freston said we “will still call him colleague and friend. He wanted to run something.”

Added McGrath: “He wants to lead and follow that dream personally. I’m sure there will be plenty of offers.”

Said one source: “Rosenthal was a great executive but he didn’t really have the creative chops that she did. I bet his phone is ringing off the hook, because he has such spectacular experience and such a great track record. It will be his choice.”

This source said Rosenthal would be “perfect for the Comcast program czar job,” a position the giant MSO has said it is no longer looking to fill.

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