NEW YORK — Comcast Corp., the fourth largest cable operator in the U.S., will fold its underperforming home-shopping channel Q2 and replace it with Style, the new spin-off network of E! Entertainment TV.
Q2 has claimed a subscriber base of as high as 11 million but Deb Green, senior VP of affiliate relations for E!, says the figure is more like 6 million to 7 million. Since Comcast is the managing partner of E!, the 2 million subscribers to Comcast systems that now get Q2 will receive Style on Oct. 1, the date of the transition.
Those 2 million are the only subscribers on board so far, and Green will have to browbeat the other cable operators that carry Q2 to replace it with Style rather than with another cable network.
Although Green declined to discuss financial terms, various cable operators say Style is offering a generous $6 a subscriber to a cable system that will sign a 10-year carriage deal, placing the channel on the same tier as all of the mass-circulation networks like CNN, ESPN, USA and Discovery. Among new cable networks that can get circulation no other way, such “launch budget” fees are fairly common practice.
From day one, the cable operator will pay Style a monthly fee of 9¢ a subscriber for the first year, which is relatively high for a fledgling network. The rate will go up a penny a year for each of the next nine years, topping out a 18¢ a month in year 10.
Cable systems will try to generate offsetting revenues by selling the two commercial minutes an hour Style that will provide for local use, which is par for the course among cable networks, although some of the newer ones are setting aside three minutes for cable operators.
Green acknowledges that buying space on basic cable from channel-strapped operators will be an uphill climb. “I’ll take any deal I can get,” she said, referring to the digital tiers of services that more and more cable systems are creating to harvest extra revenues from their subscribers.
However, these digital tiers often pull in only 10% to 20% of the cable system’s subscriber base because customers are forced to pay extra for them, and the networks tend to appeal only to a narrow audience. That’s why Green will try to secure basic carriage for Style.