New MTVi Unit Taps Butterworth

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MTV Networks Online last week officially formed MTV
Interactive (MTVi)
, a new Internet-only music outfit that will amass the VH1.com,
MTV.com and SonicNet.com brands.

Former SonicNet president Nicholas Butterworth was tapped
as president and CEO of MTVi, and he will report to Fred Seibert, president of MTVN Online
and chairman of MTVi.

These announcements are a culmination of a series of moves
this year by Viacom Inc.'s MTVN Online to prepare itself for the increasingly
convergent broadband age.

A key move was a deal with Liberty Media
Group's Liberty Digital
that brought interactive music-video network The Box
Music Network and music Web sites SonicNet, Addicted to Noise and Streamland into the MTVN
Online fold, in exchange for a 10 percent stake in the planned unit.

MTV Networks officials have hinted in recent months at the
possibility of spinning off a separate, publicly traded entity made up of its online
properties at some point.

"We are building out our online brands into
innovative, first-choice destinations on the Web for music fans," MTVN chairman and
CEO Tom Freston said in a prepared statement.

Butterworth referred to the new unit as a "big
start-up company" combining entrepreneurial spirit with the marketing muscle of a
ubiquitous brand. "I've worked with Lee Masters at Liberty, and it will be a
terrific opportunity to work with Tom Freston and Fred Seibert," he added.

Butterworth laid out his plans for all three Web sites.
"With MTV's core audience, you're talking about 'generation Y'
early adapters [who are] comfortable doing multiple things at the same time," he
said.

To that end, Butterworth added, MTV has created Web Riot,
which will air on MTV: Music Television in November. The show will be a real-time
music-trivia game, and viewers with computers at home can play along via the Web site.

As for VH1.com, Butterworth is planning an October relaunch
with a totally revamped site. "It has tremendous brand equity and programming right
now built around the idea of music first," he said. "The Web site will extend
that into other areas like VH1@Work, reaching our viewers in a whole new context."

VH1.com will also have a strong electronic-commerce
offering with its more affluent and older target audience in mind.

With SonicNet, Butterworth plans to expand the breadth of
coverage to include noncore musical genres like country, classical and opera as it goes
into a promotional blitz for the brand across the cable networks.

In fact, Freston has earmarked a $300 million promotional
budget over a five-year period for all of MTVN Online's properties. Roughly one-half
of that amount will go toward the three MTVi properties.

Finally, another component of the new unit will be the
implementation of audio-compression technology on the Web sites, allowing for downloadable
music.

Butterworth is also looking to expand MTVi's existing
strategic partnerships with America Online Inc. and CDNOW Inc. to include "meaningful
relationships with multiple partners."

MTVi will be headquartered in downtown Manhattan, in the
heart of "Silicon Alley."

Beyond MTVi, MTVN Online also encompasses such properties
as Nick.com, Nickjr.com, Nick-at-nite.com, Tvland.com, Noggin.com and Redrocket.com.

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