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Rainbow sees pot of gold

Co. eyes vid-on-demand mags

NEW YORK — If Chuck Dolan’s Rainbow Media Holdings has its way, as many as 50 million digital cable homes will eventually be pulling up exclusive, special-interest video-magazine articles on their TV screens as easily as they call up Web sites on their computers.

Mag Rack is the label for a plan that’s already up and running in parts of Long Island on a cable system owned by Rainbow’s parent, Cablevision Systems.

When subscribers who buy the advanced digital box click on Mag Rack, they get a list of 10 video magazines ranging from Maximum Science and Classic Cars to Natural Health and Wine World. These are all made-up titles, because Rainbow hasn’t signed any deals with existing print magazines in these categories.

If the subscriber highlights Maximum Science and pushes “enter” on the remote, a table of contents appears on the screen under “October edition” with five video articles: astronomy’s big bang, global warming, science pundits, an interview with Lewis Wolpert, and image & science.

When you click on one of the articles, you get a taped piece bristling with information, often introduced and narrated by the full-time editor of the magazine. Mag Rack plans to update the pieces, many of which will have a shelf life of a month or less, replaced regularly by fresh articles.

Rainbow has designed Mag Rack specifically for video-on-demand, which means subscribers would be able to pause, rewind and fast-forward the articles, like a prerecorded videocassette.

Josh Sapan, president and CEO of Rainbow, says he and his staff have spent the past 2½ years on development of Mag Rack, spending about $25 million putting the concept together.

Rainbow has begun pitching the product to other cable operators, and one important question is: Will a subscriber be willing to pay a monthly fee of, say, $9.95 to get the Mag Rack service?

Jim Stroud, senior analyst for the Carmel Group, says people will balk at paying a fee for Mag Rack because they’re so used to getting information free by clicking through myriad Web sites.

People also feed their information hunger, Stroud says, when they surf CNN, Discovery and other cable networks as part of their basic package.

However, citing the convenience and control of the information flow that Mag Rack offers, Matt Strauss, executive VP and GM of Mag Rack, says many subscribers will embrace the service, particularly to find out more about a subject they’re obsessed with.

Stroud begs to differ, saying cable operators would be better advised to offer a service like Mag Rack free to subscribers who buy a certain number of billed services, like pay-per-view movies, HBO on Demand and even a high-speed cable hookup to the Internet.

Rainbow is not opposed to such a strategy, Strauss says, but it would trigger some potentially hairy negotiations over how much a cable operator should pay in monthly fees for each subscriber who gets the digital package that includes Mag Rack.

By contrast, if subscribers were willing to buy Mag Rack a la carte for $9.95 a month, Rainbow and the cable operator would probably be able to agree much quicker on the percentage split that each would pocket, Stroud says.

One highly unlikely buyer of Mag Rack, he adds, is Time Warner Cable, whose parent company, AOL Time Warner, owns, at last count, 36 print magazines, many of which could spin off video versions without breaking a sweat.

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