It has always been challenging to be an independently owned cable-programming network, and today’s content and distribution landscape is more treacherous than ever.
Without the clout and deep pockets of big corporate parents, the bulk of independent networks must rely on unique content and the ability to be nimble in the face of change.
To be sure, securing a slot on the video dial has never been more complicated, as competition for consumers’ attention expands into new distribution channels and distributors place more focus on broadband offerings than the traditional bread-and-butter video business.
“It’s almost impossible for an independent programmer to gain distribution today,” said Sean Riley, executive VP of business development at 1 Mainstream and a former Fox Networks distribution executive. “Unless you have an extremely compelling and unique proposition, it’s going to be very difficult.”
Cord-Cutting and Chaos
It’s been a rough couple of years for just about every traditional pay TV network, with cord-cutting on the rise. No network has been immune to changing consumer video-consumption habits, and some industry pundits predict a pretty dark future for independent programmers.
Continued industry consolidation adds to the chaos. In the last year alone, merger talks have involved such distributors as Comcast, Time Warner, Charter Communications, Bright House Networks, DirecTV and AT&T, making it difficult to get substantive meetings on any matter aside from big renewal deals. Just this month, Cablevision Systems agreed to sell to Netherlands-based telecom firm Altice, on the heels of its purchase of Suddenlink Communications.
The consolidation wave has whittled the list of big U.S. pay TV distributors to just a handful. Programmers are consolidating, too.
Speculation about possible sales of mid-sized and small networks is continuously swirling, and some industry observers have said that mergers are the best and only way an indie network can survive long-term. Some networks are buying others to gain distribution, rather than programming. Take NUVOtv: Launched as a rebrand of Sí TV, the network for Latino millennials is now being rolled into music network Fuse. NUVOtv’s owners acquired Fuse last summer from Madison Square Garden, which saw a national music network as a non-strategic asset.
“If you think you have an amazing new channel concept and you want traditional cable distribution, you’ll have to buy your way on; find an underperforming channel, buy the sub base and build value for the MVPDs [multichannel video programming distributors] by turning it into something great,” Riley said.
As the need to build viewership and ad revenue increases—and with competitive pressures making it tough to raise license fees—the trend toward content mergers will only escalate, according to industry observers.
Despite all of this, independent operators interviewed for this story were undaunted by the obstacles they face. With chaos and uncertainty comes opportunity and growth, network executives said.
“We are the last family-owned independent programming company,” Stanley E. Hubbard, chairman and CEO of ReelzChannel, said. “It’s the only way we know how to do business.”
But ReelzChannel isn’t quite as indepedent as, say, Poker Central, owned by a partnership of three of the world’s top poker players: Daniel Negranu, Antonio Esfandiari and Phil Hellmut. Hubbard is also chairman and CEO of Hubbard Media Group, which owns ReelzChannel and F&F Productions and is Ovation TV’s controlling shareholder, according to Hubbard. Parent Hubbard Broadcasting also owns and operates 14 television stations and 48 radio stations.
Larger parents ultimately own several independent networks: AXS is owned by billionaire Mark Cuban, AEG Entertainment, Ryan Seacrest Media, Creative Artists Agency (CAA) and CBS Corp. GSN is owned by AT&T/DirecTV and Sony Pictures Entertainment.
Outside TV is affiliated with Outside magazine and Powdr Corp., a privately held sports marketing and entertainment company that owns and operates nine mountain resorts and action camps.
Despite all these issues, executives said their networks continue to secure carriage. Even new networks are launching in this uncertain environment. Case in point: Poker Central is set to launch Oct. 1.
After producing shows for other networks, the partners in Poker Central decided to launch their own channel. Discovery Communications distribution executive Clint Stinchcomb was hired as Poker Central’s president, and former Turner Broadcasting System executive Sid Eshleman was named chief distribution officer.
Poker Central will launch with 2,500 hours of original programming including biographies, tournaments, instructional shows and even some pokerrelated films. It’s also offering distributors TV Everywhere and on-demand content and has a strong social media brand with more than 260,000 Facebook “likes,” according to Stinchcomb.
Stinchcomb declined to divulge which distributors would be carrying the network when it launches, but said Poker Central is pursuing a global distribution strategy and will be available in the U.S. and overseas from day one.
Despite the 21st century technologies and distribution outlets that exist today, network executives said carriage negotiations often harken back to a simpler time when carriage contracts were straightforward and didn’t include strong-arm tactics or leverage plays.
Interestingly, all the distribution executives interviewed for this article are cable veterans and have been negotiating carriage deals for decades. They are familiar with just about every trick in the book and aren’t daunted by the prospect of competing with large, multinational network conglomerates, in part because at some point, most of them worked for those very same companies.
Content Still Counts
Every executive interviewed for this article boasted that a distinct brand of programming is what differentiates their network from the pack. But these days, that doesn’t necessarily translate into automatic carriage.
Given the choice between allocating bandwidth to carriage of an uber-niche service or freeing up space for their broadband customers to access, say, Netflix, many operators are choosing the latter.
On the other hand, many hard-pressed small and midsized operators, such as Suddenlink and Cable One, are dropping expensive services such as MTV and Comedy Central from big content firms such as Viacom, and replacing them with indie networks such as ReelzChannel and TheBlaze.
Independent network Outside Television is a sports network, but one geared to lifestyle pastimes such as snowboarding, mountain climbing and surfing than expensive live football or baseball games. Such aspirational, informational content appeals to the network’s core audience while keeping license fees in check, Outside TV senior VP of distribution Dennis Gillespie said.
Outside’s distributor pitch is a demographic-based one: The 141 million Americans who value an outdoor lifestyle are generally affluent and willing to spend on their passions.
“Our viewer demographics are cable’s best customers, so it makes sense to add us to their lineup,” Gillespie said.
Anthem Sports and Entertainment is also in the niche-sports arena. It’s pitching a trio of networks: Fantasy Sports Network, Fight Network and Pursuit Channel.
Fantasy Sports, or FNTSY, has recently been picked up by Suddenlink, RCN and Buckeye Cable- System. The popularity of pastimes such as Fantasy Football and Fantasy Baseball, plus FNTSY’s willingness to be carried on sports tiers, have helped the network gain ground.
“Our pitch is very simple: we’re a complement to anything you’re doing, whether it’s in a sports tier or any kind of sports programming,” Bruce Littman, Anthem’s VP of content distribution, said.
Littman—who previously held distribution roles at Fox News Channel, MSG Networks and Fox Cable Networks—said it remains difficult to do deals with the biggest distributors, as they would rather allocate bandwidth to Internet provision than video.
“It’s still a barrier, and [so are] programming costs,” he said.
It has also been harder to cut deals with the big, merger-preoccupied distributors, Littman said. So Anthem has been going after smaller providers, hoping to maintain that momentum by signing a contract with the National Cable Television Cooperative.
RFD-TV provides news and entertainment to rural Americans, but also gives urban viewers a glimpse of what a rural lifestyle looks like. The channel is currently distributed in every urban DMA in the country via DirecTV, AT&T’s U-verse TV, Dish Network and Verizon Communications’s FiOS TV, founder and president Patrick Gottsch said.
“That being said, it has been harder to get urban-based decision makers to understand the value of RFD-TV’s content,” Gottsch said.
Pivot, the millennial-focused channel owned by Participant Media, is a more traditional network offering shows, movies and documentaries. But its mission is less about gaining eyeballs than it is inspiring positive social change, executive VP of affiliate relations Stephanie Ruyle said.
Since launching two years ago, Pivot has gained entry into 47 million homes, according to Ruyle. Of course, winning an Emmy for its original series HitRECORD on TV and making the Top 10 of such magazines as Entertainment Weekly and Atlantic Monthly has helped at the negotiating table.
Pivot is aimed at millennials on the surface level, but that’s just part of the network’s demographic story, Ruyle said. “Millennials tend to have a pro-social mindset, and that’s our mission,” she said. “But that mission also extends to Gen X-ers and [baby] boomers.”
Faith-friendly networks UP and Aspire also take a broader tack, with a focus on original, family-centric programming. ReelzChannel focuses on all things Hollywood, with a bent toward opportunity. The network has been successful in picking up hot-button projects that have been abandoned by other networks, such as miniseries The Kennedys and the Miss USA Pageant.
The risks have paid off: Reelz recently delivered double-digit year-over-year ratings increases in household viewings in all key demos, Hubbard said. The nine-year-old Reelz is now in 68 million homes.
Newsmax is attractive to distributors as an alternative to Fox News Channel, according to founder Chris Ruddy—both go after the same demographic groups and offer news reporting with a conservative bent, though Ruddy said Newsmax’s content is less politicized and agenda-driven. It’s also free, as the network is currently fully ad-supported, with revenues of more than $100 million last year and no plans to charge an affiliate fee anytime soon, Ruddy said.
Linear Still Rules, But…
Cord-cutting and alternative delivery methods are all on the uptick, but traditional linear network distribution remains a core business strategy for most independent networks. That’s a tall order, with most operators focusing on their broadband products and some smaller providers pulling back on video altogether.
“The traditional network is still the best way of marketing a network today, and will be in the foreseeable future,” Outside TV’s Gillespie said. “That said, there’s a reason major media companies like HBO and CBS are deploying competitive distribution strategies. It’s a defensive play at this point, but they are still making so much money with traditional distribution methods, they don’t want to cut that just yet.”
Poker Central’s Stinchcomb added: “For all the talk of new platforms, linear is still king. We have robust TVE and VOD offerings, but linear remains the most important at this point.”
Ovation TV also counts traditional video distribution as its core business model, executive VP of content distribution Brad Samuels said, adding that the network considers its distributors to be long-term partners. He said that small operators consider independent networks like Ovation to be sort of kindred spirits, while larger providers like the programming diversity that independents offer.
Still, the indie networks aren’t putting all their eggs in one basket. Multiplatform distribution is a must, and independent networks are looking at developing or offering alternative distribution outlets.
Ruddy founded Newsmax Media in 1998 as a multimedia publishing company focused on politics, health and finance. Cable and satellite distribution didn’t factor into the mix until Newsmax TV was launched in 2014.
Today, NewsmaxTV counts some 42 million customers via distribution deals with DirecTV, Dish Network and Verizon FiOS TV, according to Ruddy. Unlike linear networks that migrated online, Newsmax got its start on the Internet and traditional TV came later.
“We see value in a linear network but we are also continuing to build on our OTT strategy,” Ruddy said. “We think OTT is the future.”
Newsmax launched a smartphone app last year that now counts over 500,000 users, he said. According to comScore Multiplatform data, Newsmax was the third-most-visited political news website in July with 55 million views, after CNN (136 million views) and Politico (57 million).
RFD-TV has created a live streaming and VOD option for viewers called “The Country Club.” Launched in 2010, it now counts 6,500 online subscribers; 23% of them watch every day.
Moreover, about 40% of those 6,500 viewers come from outside the U.S., Rural Media Group chief financial officer and chief operating officer Steve Campione said.
RFD-TV, which is currently in 47 million homes, is doubling its staff this summer to handle new online and social-marketing initiatives designed to leverage branded programming on second-screen devices. It hopes to double its online viewership numbers in the next six to eight months.
Younger-skewing Pivot is also focused on traditional linear distribution. Still, it wants to be available as broadly as possible. When the network launched in 2013, it introduced an online app for authenticated customers.
Nevertheless, Pivot’s Ruyle believes OTT still has a way to go before it surpasses linear carriage. The company would rather work with its affiliates to develop local programs and events that will keep viewers in the video ecosystem, she said.
UP and Aspire now combine for carriage in 70 million homes (UP’s affiliate-sales team handles distribution for Aspire through a partnership). The programmer considers its MVPD affiliates to be partners, but that hasn’t stopped it from pursuing alternative distribution channels, UP president and CEO Charley Humbard said.
UP recently launched gMovies, a faith-friendly streaming movie service. Most gMovies subscribers watch via subscription video-on-demand, Humbard said, but the service is also available over the top.
“We want to work hand-in-hand with our distribution partners,” Humbard said. “But we also don’t want to be restricted, so as we move forward, we want to make sure we have opportunities to grow everywhere.”
Although the distribution landscape has changed, the basic fundamental relationship between MVPDs and content networks isn’t much different now than it was in 1980, when networks such as MTV and Nickelodeon were seeking shelf space, Ovation’s Samuels said.
Programmers and operators worked together on local promotions to entice new customers to jump on board, he said. Content providers often spent millions of dollars and hundreds of man-hours on affiliate support each year.
The bar to keep up with the “big boys” continues to rise, according to Samuels, but keeping up isn’t as difficult as it sounds. One key point of difference is field support.
The big network groups might be able to send affiliates money to promote their offerings, but Ovation, which is in 46 million homes, is “set up to superserve our affiliates, because we can focus solely on one network and customize on ways we can help our affiliates,” Samuels said.
The Local Edge
In other words, Ovation takes the work out of an affiliate event or promotion by working closely with the operators and providing resources and manpower, he said.
Pivot works with its affiliates to sponsor local screenings to educate viewers on the issues the network is dealing with at any given time.
“That’s what our platform is all about: We amplify and use storytelling to drive discussion and action on pertinent issues,” Ruyle said.
Despite its global strategy that includes international distribution and a strong social-media presence, Poker’s Stinchcomb sees big opportunities in working with local affiliates to promote and expand the network’s reach. “A personal touch with all our affiliates will play an important role in our overall business strategy,” he said.
For instance, poker tournaments are now the most popular fund-raising events in the country, he said, and Poker Central could play a role there.
Of course, even with the best affiliate-relations efforts, in the current climate, would-be TV programmers can get their content in front of viewers without any carriage at all.
“Today, a new programmer can be in front of 40 or 50 million TV viewers without making a single call to a cable operator,” Riley said. “The barriers to entry in this space are falling every day, while the barriers to launching on MVPDs are only getting higher.”
It has always been challenging to be an independently owned cable-programming network, and today’s content and distribution landscape is more treacherous than ever.
Without the clout and deep pockets of big corporate parents, the bulk of independent networks must rely on unique content and the ability to be nimble in the face of change.Subscribe for full article
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