New York -- As MTV Networks finally announced plans to
provide Asia with two versions of its Nickelodeon channel, officials there also said MTV:
Music Television was likely to increase its commitment to Korea.
Nickelodeon has been conspicuous in its absence in
launching channels in Asia, although it's been researching the region for years.
Indeed, outside of the partial-channel feed of Turner International's Cartoon
Network, the world's most populous continent has lacked a full-fledged
children's channel of any kind. But last week, Nickelodeon announced that it has
earmarked fourth-quarter launches for an English-language channel in the Philippines --
where English is widely spoken -- and a Japanese-language service in Japan.
Nickelodeon is following a pattern established in Latin
America, where it has refrained from announcing the debuts of channels until at least one
key distribution deal is nailed down. In the Philippines, that pact is with the
country's largest MSO, Asian Cable Communications Inc.; and in Japan, its agreement
is with direct-to-home service DirecTv Japan. Neither agreement involves equity: They are
purely distribution plays.
Neither of those two markets has escaped the Asian
financial crises unscathed. The yen has plummeted dramatically, and Philippine operators
have cited their country's economic woes in attempting to renegotiate carriage rates.
What's more, the advertising market for kids'-related products in Asia is
relatively poor when compared with other regions -- a major reason why Nick concentrated
its launch efforts on other areas of the world first.
Zenith Media Group recently reported that it has downgraded
the overall advertising potential for Japan alone in coming years. For example, across all
media, the drop is expected to be 4 percent in 2000, compared with 1999 results. Overall,
Zenith is wiping $1 billion off the media-advertising-revenue books for Japan by that
But Herb Scannell, Nick's president, and Jeffrey Dunn,
its chief operating officer, remained bullish on the prospects for pay television in both
the Philippines and Japan, and they said the economics of the deals that they forged made
the timing right.
Separately, Bill Roedy, president of MTV Networks
International, noted that the regionalized Asian services for MTV are showing huge,
double-digit revenue growth, although they have yet to break even. He expects breakeven to
occur in about two years, or five years after MTV Asia's relaunch in May 1995. And
Roedy insisted that the company's recent decision to drop its effort to find a new
partner in the region through investment bank Goldman Sachs & Co. was not based on a
lack of potential allies, but on the realization that the Asian unit was doing so well
that it didn't need the assist.
Roedy also said MTV is negotiating to acquire an equity
stake in Korean music channel M-Net, which currently licenses some programming from MTV.
M-Net is currently owned by Cheil Jedang, the large holding firm that has also invested in
Hollywood studio DreamWorks SKG. Cheil recently diluted its investment in DreamWorks
because of the impact that the Korean currency devaluation has had on Cheil's bottom
But Roedy explained that MTV's potential buy into the
Korean music channel is motivated by changes in Korean media laws. In response to
International Monetary Fund prodding, the government has relaxed regulations that
previously barred overseas companies from investing in TV services.