Viacoms Next Makeover Target: CMT

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NEW YORK -Viacom Inc. wasted no time in transforming country-flavored TNN: The Nashville Network into the general-entertainment channel The National Network. But that doesn't mean the programming giant doesn't believe in country music.

Viacom's MTV Networks unit is revamping TNN's sister service, CMT: Country Music Television. The game plan: to own the country-music niche on television. That's despite the presence of Great American Country, a scrappy, independent rival that's lured millions of subscribers away from CMT over the past three years.

Next year, Viacom will double CMT's programming budget to develop and air exclusive long-form programming, series and big-event specials, all of which are meant to drive viewers to the channel.

In one plus, CMT will inherit TNN's library of country programming and its mantle as a prime outlet for country. Viacom has vowed to bump up marketing dollars for CMT as well.

John Sykes, the executive who used irreverent and fun signature reality programs to transform VH1 from a sleepy network to a hip destination, was named president of CMT in June.

"CMT reminds me a lot of VH1 five years ago, when we saw an opportunity and we began to invest in that opportunity," Sykes said. "But the revamped CMT will look nothing like VH1 or [MTV: Music Television] or any other music service. It's going to have its own, stand-alone look.

"And, more importantly, everything about it will be country. We will not turn it into some AC [adult-contemporary] amalgam of VH1. We already have a VH1."

Sykes, who retains his title as VH1's president, is enthusiastic about the task before him. CMT, like TNN, had been part of CBS Cable.

"We really saw CMT as beachfront real estate: 40-million-plus homes and analog distribution, now the only country game in town, outside of GAC, which is run on a shoestring," said Sykes, adding, "I'm in no way trying to put GAC down. I look forward to competing with them."

But by investing in original programming, CMT has a chance to be "one of the next analog growth channels," according to Sykes.

"CMT's an opportunity to evolve country music into an exciting television format," he added. "What we'd like to do with CMT is make it not just a country radio station on TV, but a television network that's dedicated to country music. And that's what we did with VH1 a few years ago.

"There's still a place for music videos on the network, but we will complement those videos with entertaining, informative and interesting long-form programming-and engaging programming-about country music."

BIG BUCKS BUDGETED

Viacom plans to invest "tens of millions of dollars" in CMT over the long term, according to Sykes. CMT's programming budget, now at just under $10 million, will move closer to $20 million next year, he said.

"That will give us a couple of daily strips, one or two weekly documentary-type series, and four to five big entertainment events a year," Sykes said. "What you will see is millions of dollars of new programming on the screen in 2001. On top of that, you'll begin to see us be more aggressive in how we market the service to the customer."

Sykes is looking to hire a top programmer to work with CMT's existing team, which will remain in Nashville. That new executive will shepherd the network's expansion into original long-form programming for its primetime-access and primetime schedules.

The goal is for CMT's programming mix to consist of one-half originals and one-half music videos within three years, according to Sykes.

"This isn't a niche business," he said. "The same way the adult-music business was written off for VH1, we're dealing with perception versus reality about country music.

"It will be our job to get the word out that county music never went away, that in fact it's going through a new growth phase," added Sykes. "But programming-wise, we're going to beef up our long-form programming and production staff.

"We're not going to create a lot of overhead, but we're going to assemble a key program team around [general manager] Paul Hastaba and Chris Parr, who is already there [as director of programming]."

Viacom saw a lot of upside potential for CMT, which had been a hipper, younger-skewing version of the old TNN. And Sykes wants to be even younger, in terms of its audience.

"We looked at The Nashville Network and said, 'As the Nashville Network, this has gone as far as it's going to go,'" Sykes said. "We changed the name, changed the programming. With CMT, we felt the opposite. We felt it had not yet mined the country-music business.

"Country music has become very cool. It's the perception in the old-guard media that thinks it's cowboy boots and twang. Country music is about the Dixie Chicks, Shania Twain, Faith Hill and Brad Paisley. These are good-looking, bright young stars that are pretty darn close to pop music when you look at them."

Shortly after Viacom merged with CBS Corp. and its CBS Cable unit, the company commissioned two studies on CMT: a segmentation study on the public's interest in country music and an examination of CMT's brand, according to Sykes. The segmentation study made Sykes upbeat about the format.

NOW SKEWING YOUNGER

"Country music over the years now is something that has built an interest outside of just the South and Nashville," he said. "There were people interested in this format from coast to coast. But some of them have no idea where to find it. And we also found what we hadn't seen exist in the past, and that is a younger demo showing interest in country."

According to Sykes: "The perception was that country was for 45-year-old female homemakers living south of the Mason-Dixon [Line]. And what this showed is that there are young families in their 30s and singles in their 20s who love country music and who are looking for an outlet to not only watch music videos, but to also enjoy country-music-based long-form programming."

The point was really driven home for Sykes a few months ago, when he went to see the Dixie Chicks at New York's Radio City Music Hall. They sold out for two nights.

"Here was this country band, playing in New York City, sold out," he said. "The fans weren't wearing cowboy boots and cowboy hats. They were wearing Gap khakis and buttoned-down shirts.

"And they were screaming for this band's music, which really reinforced what we saw in the research, which was that country is not about a lifestyle. It's about a music style. People can love county music anywhere in America because its roots are so deeply embedded in America. When I saw the Dixie Chicks, finally all the research we did came together."

The brand study on CMT also yielded some interesting findings.

"The biggest problem we have with CMT is that people didn't know about it because it wasn't carried on their cable systems," Sykes said. "But the people who did get CMT held it in high perceived value and felt it was young and contemporary.

"So the good news for us was that CMT wasn't a problem child, it was just that no one knew about it. So basically, coming out of the branding study, we knew we had to spend money marketing this service so more people knew about this kind of hip, younger-skewing country network."

Heartened by the results of the two studies, Viacom began chatting with MSO officials about CMT, according to Sykes.

"Once we knew we had a business, we went out and just straw polled a lot of cable operators that we do business with," he said. "And the response was, 'If you make CMT special, if you make it like VH1, we'll support you, because we know there's a strong interest in country music on the part of our customers.'

" 'Show us you can make it unique, '[AT & T Broadband executive vice president of programming] Matt Bond said to me. 'It can't be a commodity. It has to stand for something. It's got to have exclusive programming that CMT can call its own.'"

CMT is developing a programming and marketing plan, and will develop weekly specials and series to complement the music videos it now airs.

"The viewers still love music videos," Sykes said. "And we'll still use them strategically on the channel, in fact, especially in year one, as we're beginning to develop long-form programming."

CMT already has some series, said Sykes, who added that the network has done "a fantastic job stringing videos with VJ wraparounds, and interviews." Showcase series such as
Hit Trip

combine videos with interviews.

CREATING EVENTS

As CMT develops original long-form programming, which it hopes to debut on-air by mid-2001, it will create some events and stunts to lure in a bigger audience, according to Sykes. For example, CMT already plans to repeat the
34th Annual Country Music Association Awards-

which first aired on the CBS broadcast network, CMT's corporate sibling-four times.

VH1 used stunts, like the concert
Divas Live
, in a similar fashion, until it had a substantial original-programming lineup, Sykes said.

CMT will also get involved in the Academy of Country Music Awards and with the new, $37 million Country Music Hall of Fame in Nashville.

"They're great ways to drive sampling, which will drive cume [cumulative audience] on the network," Sykes said. "But they also help to begin to brand the network and what it stands for."

In terms of long-form programming, he added: "There will be much more emphasis of the channel on the power of country music in the way stories are told, its power as an American form. And you're going to see how really broad country music can be without leaving the genre."

CMT will also be trading content from CBS' Infinity Broadcasting Corp. country-music radio stations and inheriting programming from TNN.

"We have a tremendous library of programming from TNN," Sykes said. "And we have some great country programming we produced at VH1, great Shania Twain programs and Faith Hill programming that can work."

Even before the makeover, CMT's ratings were not bad, according to Sykes. In the third quarter, it posted a 0.3 in primetime, according to Nielsen Media Research.

"The good news is there is a decent audience there right now," Sykes said. "There are some decent ratings on the channel, but people need to know about it. We need a primetime schedule.

"The daytime ratings are on a par with everyone else. Where they really fall is primetime, because that's where you've got to go with your long-form."

And while CMT's demographic now is 25-to-34, Sykes would like to see it skew younger, to 18-to-34.

"I see a lot of parallels with CMT today and VH1 six years ago," he said. "In both cases, a lot of people had written VH1 off, the same way the cynics may have written CMT off. It's only because we really haven't invested in the programming.

"CMT's got great people there with great ideas, and now they have the opportunity to be the only game in town.because TNN is now The National Network, and it's leaving Nashville. And country music is going through a growth phase today with the Dixie Chicks, Shania Twain and Faith Hill like it was 12 years ago with Garth Brooks. So there is a chance to take advantage of this new wave of country."

Sykes said he's convinced CMT can own the country-music TV category, despite competition from GAC, owned by Jones International Networks.

Over the past several years, GAC won the favor of many smaller operators, convincing them to switch out CMT, in part, by offering small upfront cash launch fees, free carriage and, in some cases, equity in JIN. GAC is now at 15.4 million homes-small compared with CMT's 42.2 million, but growing relatively quickly.

CMT expects to see distribution growth, in part through the deal in which Viacom sold its stake in regional sports service Home Team Sports to Comcast Corp. In exchange, Comcast is giving a number of MTVN services additional distribution, including CMT.

Despite the inroads it has made against CMT during the past few years, Sykes believes GMC has a tough row to hoe now that Viacom plans to invest heavily in CMT's programming.

"GAC's invested little or nothing in their programming," he said. "They're commoditizing country music by spinning videos, running a bare-bones operation and buying subscribers. That will only work with affiliates for the short term, because in the long term, analog space is too valuable.

"You really have to give the affiliate and customer true value in the programming, otherwise they're going to look at you like a commodity and your channel space won't be valuable."

Said Sykes: "The only way GAC can survive is if they invest in their programming, like we're going to invest in our programming. And that will require tens of millions of dollars of investment, like we're going to do. [Viacom president] Mel Karmazin and [MTVN chairman] Tom Freston have really said that they're in this for the long run. It's important for our affiliates to know we're going to treat this network like any other MTV network that we've developed over the past 20 years: as a long-term, program-driven service.

"We're not looking to give it away on the cheap and run it for nothing. It's not a short-term play. It's about providing a valuable programming slot to our affiliates."

GAC IS SPENDING, TOO

Jeff Wayne, president of Jones International Networks, maintained that CMT also shelled out fees to secure carriage. Sykes denied that CMT ever paid up-front launch fees, although he allowed that "there will always be marketing dollars for launches."

GAC has been increasing its spending on original programming, said Wayne. It recently launched a new show,
Country Request Live
, which has done well in the ratings.

"We also are upgrading our programming tremendously," Wayne said. "The consumer is going to win."

And GAC is staying focused on country-music videos, while adding in some original shows and event programming and album showcases. The public likes the videos, Wayne said.

GAC has a close relationship with the record labels in Nashville, and also benefits from a partnership with Jones-owned Jones Radio Networks.

"What is Viacom's commitment to country music? 'Wayne asked. "Most of what they do is rock 'n' roll."

GAC will remain a boon to cable operators, according to Wayne, because its presence will give MSOs more leverage, and prevent CMT from having a monopoly on country-music services.

But Wayne said Sykes did an excellent job turning VH1 around, and acknowledged that Viacom is a tough rival to face.

"We know we face a formidable competitor we can respect and admire," Wayne said. "But we have the ability to do better."

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