Looking to jump-start its drive to get into 40 million
analog homes, Travel Channel is shelling out launch fees to the tune of $5 to $7 per
subscriber, including a cash incentive to DirecTv Inc., according to cable sources.
Supported by the offer of launch fees, Discovery
Communications Inc. -- which acquired 70 percent of Travel from Paxson Communications
Corp. in 1997 for $20 million in cash -- has made some distribution inroads for the
DirecTv is slated to add Travel to its lineup Dec. 1 -- a
gain of more than 3 million homes -- said Bill Goodwyn, Discovery's senior vice
president of affiliate sales and marketing. Travel is paying the direct-broadcast
satellite company the same kind of launch fees per subscriber as it is paying to cable
operators, sources said.
However, a DirecTv spokeswoman said the carriage deal for
Travel hasn't been finalized, and she declined to comment on launch fees.
Aside from any pending DBS deals, Travel is close to
reaching a corporate-carriage deal with Time Warner Cable, sources familiar with the
matter said. And this fall, Cox Communications Inc. launched Travel in five markets
representing 1.3 million homes: Oklahoma City; Phoenix; Macon, Ga.; San Diego; and Hampton
Goodwyn confirmed that Travel was offering cash incentives
for analog launches, but he declined to specify how much, saying only that they were in
line with what programmers such as E! Entertainment Television are paying to secure analog
berths for their new channels. E! is angling to get distribution for its start-up fashion
Goodwyn added that the cash incentives are being paid in
return for substantial distribution commitments from operators.
"It's no secret that the last remaining analog
space is very competitive," Goodwyn said. "Yeah, we have an incentive for
carriage. It's competitive with what others are offering."
In addition to the launch fees, Discovery is also offering
one year or more of free carriage for Travel, cable sources said. Goodwyn scoffed at
reports that Travel was paying $10 per subscriber to Time Warner.
Ironically, Travel had been on DirecTv until the fall of
1996, when the network's then-owner, Landmark Communications Inc., refused to pay the
DBS provider compensation to keep its slot on the service. As a result, DirecTv dropped
Travel and replaced it with Fox News Channel, which paid $10 per subscriber for carriage
on the bird.
Discovery has used launch fees before; it was able to drive
distribution for Animal Planet by offering them.
In addition to Style and Travel, a flock of networks are
offering launch fees in order to get valuable analog space, including Pax TV, Game Show
Network, The Box Music Network, Outdoor Life Network and Speedvision. And both DBS
providers and MSOs are collecting the fees.
Discovery has aggressive analog-distribution goals for
Travel: Some skeptics said they're far too aggressive when analog space is so
limited. Travel reaches roughly 20 million homes and, by the end of the year, with the
DirecTv launch, it will be in 23 million, Goodwyn said. The goal is to be in 30 million
homes in 1999, and in 40 million by the end of the following year.
A number of operators were impressed with the new
programming that Travel has added to its schedule.
"I like the changes that I've seen," said
Pam Burton, director of marketing for Prime Cable. "They'll do really well if
they can create a destination with their viewing segment."
She added that Travel has scored really well in
Prime's subscriber surveys.
Jedd Palmer, who just left as MediaOne's senior vice
president of programming, also likes what Discovery is doing with Travel.
"I've yet to see Discovery do anything but a
terrific job with a channel," Palmer said.