Cable channels undergo TV makeovers

NEW YORK -- Don't fret if you feel baffled by all the exotic new channel names and programming choices popping up on your cable or satellite TV guide.

As pay TV's go-go years wind down, a growing number of cable networks, especially the middle of the pack, are playing with their identities and launching risky campaigns to reach more viewers.

"These are the toughest market conditions we've dealt with since the early days of cable programming," says Roger Werner, CEO of Outdoor Channel Holdings, who helped to create ESPN. "That's why you're at a point today where you're seeing more of this rebranding and repositioning than ever before."

In the past 12 months OLN (originally Outdoor Life Network), high-definition service INHD and The Biography Channel traded in those names for snazzy new ones: Versus, Mojo and Bio, respectively.

The new year will begin with CourtTV morphing into truTV, followed by Discovery Home blossoming into Planet Green.

Even some channels keeping their brand names are overhauling lineups and images. AMC, Bloomberg TV, IFC, Military Channel and TV Land are getting makeovers; A&E and Lifetime are considering it. The goal: stand out among more than 160 channels.

"It's getting harder and harder to identify with the viewers and let them know who you are and what your strategy is when there are so many channels," says Derek Baine, senior analyst at researcher SNL Kagan.

Many channels also are adjusting to meet a growing need to produce original programming. The old movies and reruns of prime-time hits that have been cable's bread and butter no longer cut it when viewers can also catch these shows via digital-video recorders, DVDs and Internet downloads.

"Consumers change in their relationship to media, and their interests change, which means you'd better well change with them and be continually relevant," says Joshua Sapan, CEO of Rainbow Media Holdings, owner of AMC and IFC.

Cable channels — the common label for pay-TV networks also on satellite and telecom TV services — have a lot on the line. The ad-supported channels collectively will generate $38.1 billion in revenues in 2007, with an enviable 36% left over after expenses, according to SNL Kagan. The cash comes largely from ad sales and the fees subscribers pay indirectly each month in cable or satellite TV bills.

Losing niche appeal?

Some executives fear, however, that the rebranding stampede could crush one of the strongest selling points for cable and satellite TV: programming that appeals to distinct, niche interests.

"Many channels in the rebranding effort are really not doing anything more than just chasing bigger audiences to generate more ad sales," says Werner. "So they end up tending to overlap one another."

There also is real danger the efforts could backfire if too many channels target the same audience of young viewers that the ad industry covets most.

"A lot of this rebranding is really just a masked attempt to make some shows that are a little bit sexier, over the edge or more violent" says Henry Schleiff, who's CEO of Crown Media Holdings — which owns Hallmark Channel — and who used to run CourtTV.

In addition to putting off some viewers, that could attract unwanted attention from regulators.

For example, Federal Communications Commission Chairman Kevin Martin has said that consumers offended by risqué programming should be able to buy just the channels they want. Opponents say a switch to this so-called "a la carte" pricing would create a programming bloodbath: Channels without large or intensely loyal followings survive by getting a small fee from all subscribers.

Why networks are gussying up brand images:

•Looking beyond cable.

The programming game is changing as the cable and satellite business matures. Just about everyone who wants these services has them: 88% of all homes subscribe to pay TV services, according to Nielsen Media Research.

As a result, the average daily audience for basic cable networks will rise 10% to 28.8 million through 2011, after soaring 41% to 26.3 million in the five years through 2006, says investment firm Veronis Suhler Stevenson. Meanwhile, the fight for viewers is more intense than ever. The average home gets 104 channels, up 70% from 2000, says Nielsen, but the average viewer regularly watches only about 16, up two.

No wonder so many channels are working so hard to stand out on TV — as well as explore other markets, including online, video-on-demand, and DVD sales.

"There's a lot of experimentation," says Discovery Communications CEO David Zaslav. "Still, the core viewership comes from the channels. If you can build that brand on cable, and then drive it through online and in VOD, you're covering all your bases."

•Fears for tiers.

Small or middle-of-the-pack channels, especially those without a powerful corporate parent, are worried about efforts that cable and satellite operators are making to rein in programming costs and boost revenues.

Most cable operators have virtually shut the door to new networks. This year, the Black Family Channel and Lime, ex-AOL-chief Steve Case's channel on healthy living, became Web-only services after many systems refused to carry them.

Even established channels are feeling a chill. Comcast caught a lot of executives' attention in June when its Chicago systems moved Outdoor Channel from its second-most-popular digital tier to a sports and entertainment tier that costs $6.99 a month.

"That's an ongoing trend that we'll all be dealing with," says Werner, whose network could reach 400,000 fewer Chicago area homes due to the change. He doesn't know whether Comcast will move Outdoor Channel into an extra-cost package on its other systems, but says, "I've heard rumors."

He has responded by lowering his price and exploring the possibility of having Comcast carry Outdoor in more cities, even if it means being on an extra-cost tier.

Comcast spokeswoman Jenni Moyer says that local executives at the Chicago system decided to make the change and that it doesn't reflect a company mandate.

•Spectrum squeeze.

Channels have incentive to rebrand and try to bulk up now. Cable and satellite companies may have to throw some weaklings overboard to make room for a coming onslaught of high-definition channels.

"HDTV takes an enormous amount of (transmission) capacity," says ABI Research's Stan Schatt. "They're going to be sticking 10 pounds of potatoes into a 5-pound bag. Something will have to give."

Potentially adding to the spectrum squeeze is an FCC vote expected on Sept. 11.

A proposal by Chairman Martin would require cable services that now transmit analog versions of local TV stations to keep offering them in addition to the digital HDTV versions after February 2009, when all stations switch to digital-only broadcasting over the air.

The aim is to ease the transition to digital TV because cable subscribers — the majority of TV households — still could watch basic channels on older analog TVs without adding a digital cable box.

Opportunity outweighs worries

Executives leading recent rebranding campaigns acknowledge these concerns, yet say they're optimistic about potentially lucrative opportunities to expand.

"Rupert Murdoch spent the last three years trying to get 30 million homes for his Fox Business Channel (which launches next month)," Discovery's Zaslav says.

"We have six channels in over 50 million homes that a big part of America doesn't know about yet. We need to let them know about those channels — and if they're not great brands, then we need to rebrand them."

Planet Green, which will focus on environmental issues, seems in Discovery's sweet spot.

"It's a cultural moment when Americans are really focused on: What can we do better? How can we make a difference?" Zaslav adds. "We've also been out talking to advertisers. A number have a traditional budget, as well as a green budget, for the very purpose of trying to meet this particular constituency."

Executives at Time Warner had a different set of concerns last year when they took control of CourtTV. They concluded that its mission was too limited — and too closely identified in viewers minds with the 1995 O.J. Simpson trial.

"The promise of Court Television is very popular to a small, vocal, energetic group, but it's not a growth strategy," says Steve Koonin, president of Time Warner's Turner Entertainment Networks. "It's our mandate to grow our business."

Market test dooms Frank TV

Koonin and his colleagues looked beyond traditional demographics and into a new field, "psychographics," before changing CourtTV to truTV — a shift that he says will cost "well into seven figures," not including marketing costs.

"We talked to cognitive psychologists," says Koonin. "We talked to neuro experts. We talked to lots and lots and lots of experts in the field of memory and consciousness to consider what brands resonated. What are (viewers) looking for? What do they want from the television experience?"

Once they answered those questions, the company hired several naming agencies that came up with more than 5,000 possibilities.

"We looked at True Nation. We looked at Frank TV — as in, 'Can I be frank with you?' That tested terribly. People conjured up a different image. They were thinking of their Uncle Frank."

He's confident that "people who have never heard of CourtTV … or dismissed it as not for them are going to see programming when they surf around, or hear our marketing, and say, 'Wow, I'd really like to watch that.' "

But as Crown Media's Schleiff looks at the industry, he warns that "one of the unintended consequences of rebranding is confusion. A brand is really just a destination, a predictable destination. In television, and perhaps in life in general, that's what the viewer is looking for."