Chicago -- With their battle to launch at full tilt, the
two proposed women's networks -- Geraldine Laybourne's Oxygen and Ted
Turner's unnamed start-up -- were busy pitching cable operators at the National Show
here last week.
But Oxygen stole the spotlight with a barrage of news.
Paul Allen's Vulcan Ventures Inc. finally announced
that it was investing up to $100 million for a minority stake in Oxygen Media.
As part of that deal, Allen's Charter Communications
will give Oxygen full analog distribution to the 2.3 million subscribers the MSO has now
and to the 3.6 million it will gain after pending acquisitions close -- a total of almost
6 million homes.
Laybourne also tucked another affiliation agreement under
her belt, with MediaOne Group Inc.
And Oxygen partner-investor Oprah Winfrey and Candice
Bergen both agreed to do primetime talk shows for the fledgling women's cable
Lastly, Oxygen unveiled a broad, multifaceted marketing
alliance with Starbucks Corp.
At the show, the big debate was whether MSOs would make
room for one or two more women's networks. The field already includes dominant
Lifetime Television and offshoot Lifetime Movie Network, as well as female-targeted
Romance Classics and E! Entertainment Television spinoff Style.
An even hotter topic was speculation about which operators
would back and launch Oxygen or Turner's latest offspring.
"This will turn into a bloodbath," one veteran
industry executive said. "Oxygen will get 20 million subscribers. Time Warner will
get 20 million for its network. And one of them will bleed to death."
Oxygen chairman Laybourne -- whose first carriage deal was
with AT&T Broadband & Internet Services -- expects her network to debut Feb. 2
with 10 million subscribers. Signed deals now add up to about 5 million at launch. In
aggregate, Oxygen so far has agreements giving it 16.5 million homes over the next few
Laybourne also confirmed that she is in talks with
additional MSOs about their taking equity stakes in Oxygen, which includes Web sites and
the channel. She wouldn't identify them, but sources said they were Cox
Communications Inc. and Comcast Corp.
Turner Broadcasting System Inc. looked like it was trying
to upstage Oxygen when it unveiled plans for its nonfiction, informational women's
network just days before the show.
Turner officials denied that the network's proposed
launch early next year was driven by Oxygen, saying that the project had been in the works
for some time.
But Turner's network does have a trump card in terms
of carriage: As a unit of Time Warner Inc., Turner can expect carriage on Time Warner
Cable's 12 million homes. Those systems are part of some of the most attractive
clusters in the country, including New York City, meaning that Oxygen could forfeit cable
carriage in Manhattan, home of Madison Avenue and Wall Street.
When asked about that particular dilemma at a press
gathering last week, Laybourne said, "I didn't say anything we do would be easy.
But if we get the best possible product and get under women's skin, it might be very
hard for someone not to offer us."
Vulcan joins Oxygen's other private investors,
including respected Hollywood producers Marcy Carsey, Tom Werner and Caryn Mandabach. The
company will have a seat on Oxygen's board.
Vulcan, which also owns a piece of cable network ZDTV,
didn't disclose how big its Oxygen stake is, but published reports put it at more
than 10 percent, which would push Oxygen's prelaunch valuation above $1 billion.
Laybourne characterized Allen -- with his
convergence-driven "Wired World" strategy -- as "an ideal investor
with a growing stable of cable systems."
MediaOne, which is being acquired by AT&T Broadband,
sent a message to the industry about the willingness of MSOs to add more than one new
women's network. It not only announced its carriage deal with Oxygen, but also one
Romance will get 3.2 million analog subscribers from
MediaOne. The network declined to comment, but it is paying $7-per-subscriber launch fees
to MediaOne, according to sources.
The affiliation deal boosts Romance's distribution to
28 million homes.
Judi Allen, MediaOne's senior vice president of video,
said it was unfair to compare the arrival of new women-oriented networks with the war
between dueling comedy channels several years ago. After all, she added, women represent
roughly one-half of the population.
"[Women] is not a tiny niche," Allen said.
"What Romance Classics and Oxygen are proposing are different approaches to attract
women. Oxygen will do original programming to inform and entertain women."
Jerry McKenna, Cable One's vice president of strategic
marketing, and Linda Stuchell, vice president of programming for Harron Communications
Corp., both saw Oxygen's presentation and both were impressed. Neither one saw
"[Oxygen's] not the same-old, same-old,"
Stuchell said. "And it's not anything like Lifetime."
Said McKenna: "Oxygen has a nice feel to it. But the
obvious question is: Is it a co-channel that we distribute along with Lifetime, or is it a
Allen and Stuchell especially liked Oxygen's afternoon
programming for teen-age girls.
The women's category leader, 73 million-subscriber
Lifetime, welcomed the competition and said it would attract more women to cable.
"It isn't surprising at all that competitors want
to come into this category of women," Lifetime president Carole Black said.
"I'm surprised at how long it took."
Oxygen's economic model calls for it to be an analog
channel, Laybourne said. It will launch with all-original programming, spending $400
million over the next five years. Oxygen is offering operators $1-per-subscriber launch
fees or one year of free carriage, according to Laybourne. The monthly license fee is
reportedly in the 17- to 18-cent range, which operators have complained is pricey for a
During a press briefing at the show, TBS Inc. chairman
Terry McGuirk said Turner's women's network would accept digital or analog
carriage -- with analog, of course, preferred.
Asked if the Turner women's network's rate card
will be as expensive as Oxygen's, McGuirk didn't get into specifics, but he said
the license fees would be low. "We know the realities of the business," he
Turner is teaming up with corporate sibling Time Inc. and
Advance Publications Inc., which owns the Conde Nast magazine stable, to create a cable
network and Web site that build on the content and brand names of magazines such as In
Style and Vogue.
McGuirk said Turner can launch such a network in an
economically feasible manner now because it already has an affiliate-sales and advertising
infrastructure in place, and it can quickly reach profitability on the Web side of the
business, with money coming in from electronic commerce, licensing and ad sales.
The official who will head the network, Pat Mitchell, said
it would do hour-long branded blocks of original programming that include shorter segments
on different topics. Mitchell, president of CNN Productions and Time Inc. Television, said
some of the subjects the women's network would cover are travel; food; fitness;
homes; profiles of and news for women; and beauty and fashion.
The target demographic for Turner's network -- set to
launch early next year with a Web site -- is upscale women who read Time Inc. and Conde
Nast magazines, aged 25 to 54, according to Mitchell. She added that those women are
already "addicted" to that content.
Oxygen's schedule -- which is built on dayparts,
rather than hour-long or half-hour shows -- will include informational and entertainment
During the Romance press conference about its MediaOne
deal, AMC Networks president Kate McEnroe pointed out the extraordinary power that women
hold in household buying decisions.
She added that the cable industry needs to remember that
and take advantage of it when marketing new services such as telephony and high-speed
"I challenge the industry not to think of just one or
two, but a whole slew of services [for women] as we grow to 150 channels," McEnroe
said, adding that operators should try to serve demographics that are currently
underserved, such as women, blacks and Hispanics.