STRATEGIES FOR LAUNCHING NEW CHANNELS IN 2006
At TViFusion, I reviewed over 150 business plans for new
television channels. In the intervening four years, only a handful
of the proposed channels have actually launched; SiTV and The Tennis
Channel having the highest profiles. Half-a-dozen others are still
negotiating for carriage with cable and DBS operators; the remaining
channels have, unfortunately, fallen off the map.
A major selling point for the addition of the digital platform
was the possibility of receiving a large variety of television
channels. But we quickly discovered the digital platform had an
unacceptably high churn rate. At a certain point, subscribers
apparently feel that the additional channels no longer justify the
additional expense. In support of this hypothesis are studies that
show subscribers regularly watch only a few favorite channels.
Operators know that It is no longer feasible to add channels to a
platform and increase the monthly subscriber fee to offset the new
programming expenses. This situation presents a dilemma for new
channels attempting to gain carriage.
At the same time, smaller channels that have already attained
carriage are facing uncertainty as to their long-term viability.
Under political pressure to become more family-friendly, operators
are beginning to consolidate channels into special-interest tiers.
This tiering presents both problems and opportunities. Basic
channels are supported by monthly subscriber fees as well as
advertising revenue. Even though their revenue-per-subscriber may be
modest, smaller channels get a considerable lift from being included
on tiers that reach tens of millions of subscribers. Being placed
in a special-interest tier with far fewer
subscribers may dramatically reduce a channel’s revenue stream.
However, placement on a special-interest tier could offset some
of the loss of subscriber fees. By definition, a special-interest
tier would be conducive to targeted advertising resulting in
higher ad rates.
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