Ratings Success Buoys MTVN Stable

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Viacom Inc. president Mel Karmazin doesn't interfere in the creative side of the business, the programming. He doesn't force synergy among his divisions. And no unit is subordinate to another: CBS doesn't have an edge, corporately, over MTV Networks.

Those are some reasons why Tom Freston, MTVN's chairman and CEO, contends the May 2000 merger of Viacom and CBS Corp. has been "net-net, very positive for us."

That's pretty high praise from Freston, since he maintains that, generally, "if you're in a big company that's a creative company, being big isn't necessarily much of an advantage."

But in this case, the merger has given MTVN two networks that he expects will drive his division's biggest gains in the future: TNN: The National Network, previously the The Nashville Network, and CMT: Country Music Television. In fact, at a recent upfront press event, it was TNN that Freston called MTVN's "hot growth network."

Since the merger, MTVN has revamped both networks.

MTVN has invested roughly $1 billion to buy programming, such as off-network shows and originals, that have drawn a much younger audience to TNN, which Freston described as formerly a regional country-music network.

While MTVN has faced challenges on the advertising side, nearly all of its analog networks are clicking in the ratings.

Not only is TNN now a Top 10 network in primetime, but MTV: Music Television has been on a ratings roll, getting even more lift from its smash hit The Osbournes.
Nickelodeon continues to enjoy its No. 1 perch in total-day ratings, while TV Land's primetime ratings climbed 29 percent to 0.9 in the first quarter.

Only VH1 is lagging in viewership, taking a financial toll on MTVN. Viacom chief financial officer Richard Bressler recently told analysts that in the first quarter at Viacom's cable unit, "ad revenues were off just marginally in the quarter, primarily due to VH1."

But MTVN has a rescue mission in progress for VH1.

TNN PLAN PUZZLES SOME

Not everyone likes, or understands, MTVN's strategy of turning TNN into a young-adult entertainment network with a program mix that includes WWF Raw, Star Trek: The Next Generation, Baywatch
and even a package of uncut James Bond theatricals.

"It seems like such a hodgepodge of stuff," said Kathy Haesele, senior vice president and executive director of broadcast for Advanswers PHD. She questioned if that program lineup was creating a real brand.

Brand-building or not, the changes are increasing viewership. With the repositioning, TNN's primetime median age dropped to 36 from 55, and its ratings in the key 18-to-49 demographic have soared 250 percent in primetime, to a 0.7 from a 0.2.

MTVN officials said that the big investment in TNN is indicative of Viacom's financial support of the programming side of its business since the merger.

"As Tom [Freston] likes to say, they've really never said no to him on a major investment," said Judy McGrath, who was recently promoted to the new position of president of MTV Music Networks Group.

"We keep expanding internationally, buying networks, starting digital networks, buying big product for TNN," she said. "I really don't feel at all like they've squeezed us, in that regard, given that it's been a tough economy and we've all been through hard things."

MTVN just launched four diginets, adding them to its suite of digital services. The programmer also is working with sister company Showtime Networks on a gay-themed network.

In terms of Viacom-MTVN synergy, a number of TNN's acquisitions — pricey ones — have come from other Viacom units. For example, TNN purchased rights to three Star Trek
series spinoffs, and five Star Trek
theatricals, from corporate sibling Paramount Domestic Television, for a price tag estimated at roughly $350 million.

TNN also bought the No. 1 hit on sister company CBS, CSI: Crime Scene Investigation,
from King World Productions Inc. — Viacom's syndication unit — for a tidy $1.6 million per episode. It comes to TNN in September.CSI, of course, has more than corporate ties going for it. "There's not a better repurpose to have right now than to have the No. 1 show in all of television," said Herb Scannell, president of Nick, TNN and TV Land.

Nickelodeon also programs the CBS broadcast network's kids block on Saturday mornings.

"It was something that made sense for both parties," Scannell said. "We increased their kids' ratings 300 percent. They went from a 0.6 to a 1.7, so CBS is back in the game with kids. We also were able to position it as a complementary play to what we were doing on Nick, because we were able to put some preschool programming there, which CBS had flirted with."

MTV'S SUPER BOWL 'GIFT'

Not too long after the merger closed, MTV: Music Television got the go-ahead to program the halftime show for the 2001 Super Bowl, which aired on sister company CBS.

"We had pitched trying to produce that show in the past for other networks, and never got off the ground," McGrath said. "In a way it was a great gift of [CBS Television president] Les [Moonves] and the CBS people to hand over … the most high-profile 15 minutes on television. They came to my office once to see what we were planning, and they really trusted us. This merger happened at a time when CBS was in a great place, taking off, flying. MTV was strong. It was a 'how-can-we-each-benefit' from this."

Even TV Land is on the synergy bandwagon, recently unveiling plans for shows that repurpose programming from other Viacom units. TV Land Legends: The 60 Minutes Interviews,
a joint venture of TV Land and CBS News, debuts in November and will be hosted by Ed Bradley.

TV Land also has partnered with the Viacom-owned syndicated magazine show, Entertainment Tonight,
on the series ET in TV Land ,
which debuts this fall.

PAYING 'MARKET RATE'

But Freston and Karmazin maintain that, generally speaking, the synergy that is often hyped as a benefit of media mergers is much overrated, and that it needs to be done selectively — and not mandated by corporate headquarters.

"Some of the Wall Street guys have a simplistic notion that oh, you have all these great benefits," Freston said. "There aren't many places where you can really do that. Life isn't that simple. There's no real advantage to it as if you were making a commodity product, like if you owned a paper mill and you bought a forest."

Freston said that in media mergers, "synergy falls down" on the programming side because outside parties usually own stakes in the shows in question.

"You [often] have a third-party participant in there, even if you own part of it," Freston said. "We get Star Trek
for TNN, [and] we had to pay a market rate for it because there's third-party participants in there. They don't want to find out that it was sold to TNN at a discount by Paramount because they're both in the same family."

When Karmazin puts his Viacom hat on as a program supplier — a King World or Paramount — he's not looking to sell only to MTVN or CBS.

"This isn't about repurposing all of our programming on our own assets," Karmazin said. "This is about what makes sense for the brands. When it makes sense, we do it. When it doesn't, we do things elsewhere. We syndicate Oprah,
and Disney runs it on a lot of stations. I'm real happy to receive checks from Disney. We sell Frasier
from Paramount to NBC. The money is real good."

Since the Viacom-CBS merger, MTVN officials say Karmazin has not tried to influence or interfere with any decisions on programming.

"I have never gotten a note from anyone at CBS," MTV president of entertainmentBrian Graden said. "My friends at Disney get them all the time."

Unlike The Walt Disney Co., where he claimed that one man's influence — that of chairman Michael Eisner — is felt on the creative side, no single corporate executive's will is being imposed on MTVN's programming, according to Graden.

Karmazin said he may discuss acquisitions with Freston, but that's pretty much in terms of him getting involved in the creative.

"He [Freston] doesn't clear his pilots with me, nor would I begin to look at them," Karmazin said. "It's the same relationship I've had with Les Moonves at CBS for all these years."

MCGRATH: COORDINATOR

In March,
VH1 and CMT president John Sykes moved over to become chairman and CEO of Viacom's Infinity Radio group. To fill the void left by Sykes' departure, Freston created a new position and put McGrath in charge of all of MTVN's music-oriented networks, a group that includes VH1, MTV, CMT and MTV2."

Each of these brands — CMT, MTV and VH1 — still have their own individual identities and purposes in life," Freston said. "With Judy there, we can better coordinate what they do. She is one of our strongest creative executives."

Scannell, in turn, is in charge of MTVN's young-adult entertainment services: Nick, TNN and TV Land.

While there are opportunities for the music networks to team up — on marketing, for example — McGrath sees a danger in lumping the three together too often.

"Clearly, these are branded businesses and you need brand champions, and there shouldn't be one mind meld," she said. "My assignment wasn't

to come up with one über music group. Tom and I share the belief there needs to be independent thinkers here, and independent brands, and independent environments … If you walk through MTV Networks, there's so many mini-cultures here. MTV's culture is so different from VH1's or Nickelodeon's."

THE VHI PROBLEM

McGrath sees her role with the music networks as maintaining their individual identities, shoring them up, giving CMT the support it needs and "just kind of getting the content flowing at VH1."

VH1 is MTVN's problem child. Its primetime ratings were down 40 percent, to a 0.3 from a 0.5, in the first quarter compared with a year ago, according to Nielsen Media Research. The baby-boomer network has been hitless for some time.

"You never have every cylinder hitting perfectly," Freston said. "John [Sykes] and the people at VH1 built a very great and strong brand. But TV networks can have a strong brand and have weaker seasons. But that's a temporary thing."

To find the right programming, and produce hits, for VH1, McGrath said she is making a full-court press to understand its audience, via research.

"The brand equity is there," McGrath said. "They just need more development, more series, more hits. We need to be sure they're riding the right wave in music. There are a lot of things happening, but not a dominant thing that makes it easy for those of us in the music business."

McGrath just appointed MTV marketing veteran Christina Norman general manager for VH1.

Meanwhile, MTV is basking in the glory of Graden's labor, The Osbournes,
the biggest ratings hit that the network has ever seen.

"People always say to me could The Osbournes
have been on VH1?" McGrath said. "Actually, I don't think so, because attitudinally it's totally MTV, and it doesn't matter how old he [Ozzy Osbourne] is or who is or where he is. I think it was the right call. That's an MTV show."

McGrath said that MTV executives such as herself and Graden had high hopes for The Osbournes, but it has surpassed their expectations.

"They had a feeling this could be something, but you never really know," McGrath said. "Something like this is either going to catch fire or not. I never thought it would be No.1 on the hot sheet of Entertainment Weekly,
or on the cover of everything, or just be talked about."

In fact, Karmazin seems to have been a little envious of MTV's success turning The Osbournes
into a hit.

"Mel said, 'Yeah, do you have one of those for CBS?' " McGrath said.

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