With channel capacity seemingly as tight as ever,
programmers are being forced to find creative ways to secure analog and digital
distribution for their networks.
In an unusual move, Discovery Communications Inc. has
basically sanctioned DirecTV Inc.'s giving the Discovery People slot on its basic service
to Discovery Health Channel. Effective Dec. 1, Discovery People, part of the "Total
Choice" package, will lose roughly 6 million subscribers -- a huge chunk of its 10
Discovery People's DirecTV loss will be Discovery Health's
gain. The new health service will get a lift as it competes against a powerful rival, News
Corp.'s The Health Network, for carriage.
"This means the race is really on with Fox," said
Derek Baine, a senior analyst with Paul Kagan Associates Inc.
On another front, two different programmers -- E!
Entertainment Television and Fox Family Channel -- are each trying to put together
transponders of digital networks, which will include services from a variety of
The networks are banding together on these
"pods," or digital packages, in order to make it as easy and efficient as
possible for cable operators to take their networks. The two new pods will also provide an
alternative, for cable systems and programmers alike, to Headend in the Sky, the AT&T
Broadband & Internet Services digital platform
E!'s "independent" pod of digitally compressed
services will include its fashion network, Style, which is already up on the satellite.
Other networks expected to join Style on its transponder include Romance Classics, Country
Music Television, ESPNews, ESPN Classic, Bloomberg Television, Toon Disney and SoapNet,
"Some operators have said they'd like an independent
transponder," said Brad Fox, E!'s and Style's senior vice president of affiliate
relations. "So we're creating a neighborhood that will give them a cross-section of
services. It's a joint effort."
Fox stressed that all of the deals aren't signed yet, so
the pod's lineup isn't final. But he hopes this independent pod can launch by the end of
In an undertaking similar to E!'s, Fox Family is looking
for networks to join its two digital services, boyzChannel and girlzChannel, on a Fox
digital transponder. Fox Family president Rich Cronin said he hasn't decided if that pod
will include "similarly themed networks, or be a broad mix."
There is already one "independent" digital
transponder, dubbed by some as the "A&E pod," up and running. It includes
The Biography Channel, History Channel International, Do It Yourself, CNBC2, ZDTV, The
Independent Film Channel, Lifetime Movie Network and MuchMusic USA.
Programmers are doing whatever is necessary to try to get
carriage in a channel-locked world, where digital is only slowly rolling out.
Not everyone is succeeding. Last week, for example, The
Freedom Forum and public TV station WETA in Washington, D.C., scrapped their plans for a
regional public-affairs channel, Forum Network. Officials complained that they couldn't
get distribution in the DMA.
"Without adequate cable carriage in the Washington,
D.C., area, continuing with the development of Forum Network would have been difficult, if
not impossible," Freedom Forum chairman Charles Overby said in a prepared statement.
"The Freedom Forum and WETA are disappointed by this market reality."
A second cable network that WETA is creating --
classical-music network Fanfare -- has seen its launch delayed. The service -- spearheaded
and partially financed by Jack Clifford, the former head of Colony Communications Inc. and
a founder of Food Network -- was announced at last year's Western Show.
Pitched as a digital network, Fanfare was slated to debut
this Thanksgiving. Now, because it is still seeking carriage deals, Fanfare's premiere has
been pushed back until the second quarter of next year, a network spokeswoman said.
Even DCI, an affiliate-sales juggernaut, has to be more
careful picking its battles in terms of getting distribution for its networks.
In the past, DCI and Discovery Networks U.S. have had a
masterful track record as far as acquiring networks and pumping up their distribution. The
Learning Channel, an acquisition, now boasts 72 million homes. And Travel Channel is the
fastest-growing network this year, gaining more than 15 million homes in the past year to
hit 34.7 million subscribers this month, according to Nielsen Media Research.
But instead of building distribution for its Discovery
People acquisition, Discovery has decided to group it with its digital "Family
Pack" of networks and seek broad analog carriage for Discovery Health, in which DCI
is investing $350 million, according to senior vice president of affiliate sales and
marketing Bill Goodwyn.
"Sometimes you have to pick your opportunities,"
Goodwyn said. "There is only a limited analog space. The distribution landscape is
difficult. Why try to mask Discovery People as an analog service? There is limited shelf
space, and operators are saying they'd rather have Discovery Health because we are making
a bigger investment in it and there's consumer interest."
So DirecTV is switching out Discovery People for Discovery
Health. "We are following the lead of Discovery," a DirecTV spokeswoman said.
"This is in response to an initiative they started."
DCI bought CBS Eye on People from CBS Corp. in December
1998. At the time, DCI said it expected the network's distribution to be "a hybrid of
analog and digital carriage." The lion's share of Eye on People's 10 million
subscribers were via direct-broadcast satellite, with another 1 million to 2 million
"In this environment, you can't bat 1.000," said
Rob Stengel, a principal in consulting firm Continental Consulting Group LLC. "It's a
question of priorities. If there's a chance for an analog slot, clearly, Discovery Health
is going to take priority ... A lot of people speculated from the get-go that they wanted
to buy [Eye on People] for the distribution."
Forum Network was hoping for analog carriage in the
Washington DMA, and it had extensive talks with the MSO that will control that market when
system swaps are completed, Comcast Corp.
"We worked with them and tried to accommodate
them," Comcast spokesman David Nevins said. Comcast -- channel-locked with nonrebuilt
systems in Washington -- offered to televise Forum Network four hours per night in
primetime, according to Nevins. But that offer wasn't enough of a commitment for WETA and
The Freedom Forum to proceed with the service.
Even gaining digital carriage has proven difficult for
fledgling cable networks. That's why some have teamed up to create their own transponders
of digitized services.
The lure for cable systems is that they get a neat package
of eight or so networks that they can pull down and carry on 6 megahertz, or one channel.
"The advantage is that it simply provides another
platform for operators to receive digital services," said Frank Hughes, senior vice
president of programming for the National Cable Television Cooperative, a coalition of
small operators. "And it's a very efficient way to do it."
In contrast, right now, an operator that pulls down
boyzChannel and girlzChannel from its transponder has to dedicate a full 6 MHz to just
those two digital services, wasting bandwidth. That's why Cronin wants to add more
networks to that pod, creating a bouquet of six to eight digitally compressed networks
that cable systems carry on a single 6-MHz channel.
Cronin said he is talking with fellow News Corp.-owned
networks, as well as others. He is also asking cable operators what network grouping on a
digital pod would appeal to them.
One programmer who will be part of the E! independent pod,
but who didn't want to be identified, said, "We're extremely excited about this
opportunity. It's something our affiliates have been asking for."
But Cronin added that he is still negotiating, and he
expects deals to get boyzChannel and girlzChannel on HITS, as well as on Time Warner
Cable's "Athena TV" digital package. He and Fox both said they want their
networks to be available on as many digital platforms as possible, as do other
LMN and Biography Channel, for example, are being carried
on both HITS and A&E's pod.
The E!, Fox Family and A&E independent pods also offer
attractive alternatives to HITS for both cable systems and programmers. Some operators
have complained about the channel lineups HITS offers on its 13 transponders, saying they
already carry many of those services on analog, or they would have to get several of the
pods -- and "burn" several 6-MHz channels -- to cherry-pick the exact networks
"We want to offer our pod to MSOs that aren't
interested in taking HITS or Athena," Cronin said. Programmers have also groused
about HITS, and they want other options. Some have balked at the cost of getting carried
on the HITS platform.
Other programmers worry about the pod position they may be
given on HITS. In some cases, they may be grouped with networks that aren't
"digital-friendly" -- bearing rate cards that discourage digital carriage --
making it hard for cable systems to strike deals to carry particular HITS transponders,
"The issue for programmers is to create their own pod
-- one that offers a friendly neighborhood," a network affiliate-sales chief said.
"Otherwise, they're at the mercy of what HITS puts them with."
The channel-capacity situation will probably get worse in
the near term, and not better, according to Baine. That because the DBS providers, if
satellite-reform legislation passes, will soon have to make space for local TV signals on
their basic packages.
"Once they have to put on local stations, it's going
to be tight," Baine added.