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Upfronts 2014: Why Cable Is Grafting New Faces On To Old Bodies

Analysis: Eager to duplicate the success of an Investigation Discovery, cable-network owners won't resist the urge to tinker in quest to capture more ad cash

TV’s biggest players start pitching advertisers next week. But you might want to keep your eyes on some of the smaller ones.

In the weeks leading up to the start of the so-called “upfront” marketplace, the annual ad-sales session when U.S. TV outlets try to sell the bulk of their ad inventory for the coming season, a few new faces have been grafted on to old bodies. Bio, long a very popular network owned by A+E, will likely get a spotlight later this week under another name: FYI, a channel aimed at young, upscale consumers. In March, Hallmark Movie Channel said it would rejigger its long-running Hallmark Movie Channel, dubbing the new creation Hallmark Movies & Mysteries.

Cable networks have long pulled up programming roots, devised fancy new logos and tested new on-air looks. In recent years, however, their owners seem a lot less patient, ready to pull the plug on a concept no matter how well-worn it is. A+E’s Bio, mind you, has been around since 1999, while Hallmark Movie debuted in 2004.

Running a cable outlet requires being restless – examine the history of Viacom’s Spike – but in recent years the owners gotten downright impatient. Witness the rapid-fire changes over at Discovery Communications, which has transformed Planet Green into Destination America, Discovery Kids into The Hub, Discovery HD Theater into Velocity, Discovery Health Channel into OWN and Discovery Times into Investigation Discovery.

Expect the pace to pick up, especially as advertisers (and viewers) have a feast of new forms of video from digital players to digest. “Smaller, niche cable TV networks find themselves in a no man’s land and many are losing the war for relevance with viewers and advertisers,” said Christopher Vollmer, global media leader for Strategy&, the consultancy formerly known as Booz & Company. “These smaller underperforming brands are just limping along – trying to eke out a living on a mix of limited advertising revenue, low sub fees, and direct response.”

The trouble is that cable’s most dynamic players – think AMC, FX, USA, TNT – are constantly adding new high-quality original programming, while digital rivals provide a stream of lower-cost fare. The dynamic squeezes some of the cable’s lower tiers.
And yet, it’s hard to give up on such media real estate. For one thing, cable and satellite players are inundated with requests for new channel berths, so letting one go means giving up space one might find hard to claw back. For another, the loss of a roost on Comcast, Cox, or Fios means giving up a steady stream of per-subscriber programming fees. Even if the money is relatively light compared to the sums collected by, say, ESPN, it’s more or less found money.

Not everyone feels that way. NBCUniversal earlier this year shuttered its Style cable network and its G4 outlet is hanging on by a thread – or, more specifically, contractual agreements that obligate NBCU to continue running repeats of “Cops” and “Cheaters” on the network once devoted to young males until the end of the term is reached. What’s more, the company has done very little to burnish networks like Chiller (which has some original programming) and Cloo (which has virtually none).

But the Peacock is the outlier. Perhaps media execs see the rise of Investigation Discovery, which has emerged as a third pillar for Discovery along TLC and its flagship outlet, and think they can do the same.

More likely, however, it’s a sense that advertisers have hundreds of video options, and can’t be bothered to talk about schedules on outlets with audience that is shrinking or staying in place.

With that in mind, it will be interesting to see how much patience Time Warner Inc. management has with new plans to revive performance at TNT and truTV, both of which were called out by Jeff Bewkes, the company’s chief executive, during a recent conference call with investors. Bewkes told those listening that improvements won’t happen immediately. “These types of changes take time, and we won’t get to where we need to be in the next quarter or two,” he said.
The pace of change in the media business is staggering. Cable players have always been more nimble and more ready to test out new ideas, but this sort of stuff is the equivalent of trying to turn a sailboat into a submarine while the crew is up on deck.

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