Classic TV Diginets Make The Old New Again

Just two men sitting across from each other at a bare conference table, deciding to do something ambitious. No lawyers, no accountants, no hangers-on: the way it seldom happens these days, other than in the movies.

The meeting took place in early 2009 during the NATPE program market in Las Vegas as the broadcasters were counting down the final days of their transition to digital, and everyone was scrambling to figure out what it all meant. The two men wanted to capitalize on the opportunity in a big way, and rolled the dice on launching a classic program TV channel, Me-TV.

It was “a gut thing,” recalls Neal Sabin, who was at the time the head of content for Weigel Broadcasting. “It was risky too, because, unlike the Hollywood studios, we didn’t ourselves own a huge library.” The other man in the room was his boss, Norman Shapiro, the chairman of the Chicago-based station group.

Yet nearly four years after its launch in December 2010, Me-TV ranks not only as the most widely distributed among classic channels, but among all diginets in the U.S., no matter the genre. (See the TVNewsCheck Top 25 Diginets ranking here.) Its ratings also compare favorably with some of the top cable outlets.

Me-TV did not pioneer the classic genre in multicasting. Others like RTN and Dot.2 plowed that field early on and met with far less success. But Me-TV has shown that the right mix of old TV shows and movies is still a winning combination for any medium.

Today, at least nine classic TV and movie subchannels are duking it out in the multicasting space.

In addition to Me-TV, there are MGM’s This TV, Tribune’s Antenna TV, NBCUniversal’s Cozi TV, Sony Pictures Television’s getTV, Fox’s Movies! and Luken Communications’ Retro TV (formerly RTN). And at least two others are on the way: Escape and Grit.

The strongest classic-oriented services are besting diginets in other genres with the most visible ratings, the most “likes” on social media and the highest advertising rates, according to several consultants who follow new media developments. 

The strength of the genre is underscored by the expectation that CBS, which has one of the largest program libraries in Hollywood, will eventually enter the classic diginet fray.  That’s the observation of several consultants, although the network’s representatives would not comment on any plans in that arena.

If CBS does toss its hat in the ring, it will put added pressure on the rerun-focused services that are already facing other challenges. They all must lock down exclusive, multi-year programming deals – and avoid steep increases when they come up for renewal. At the same time, they’re trying to package and promote their content in innovative ways.

“Quality scripted reruns are a cost-effective way to build a core audience,” says Boston-based media consultant Michael Kokernak. “However, I’m surprised there are so many of these classics channels and I wonder how long they can consist only on repeats, since quality reruns are a finite commodity. At some point they’ll need to shift gears — just the way [Viacom’s] TV Land did a few years ago — and do something original.”

“How many times can one watch Hazel?” asks another consultant, summing up the situation.

Not everyone agrees with those critical assessments. David Brenner, a founding partner of Marathon Ventures, which reps some diginets, remembers what was said about cable 30 years ago.

“No one then, when there were only a handful of over-the-air channels, could imagine a world of 30, 40 or 50 cable outlets that could attract an audience. And now look. If there is a saturation point with diginets, I don’t know what it is.”

NO DUAL REVENUE STREAM

However, it’s clear that the revenue prospects aren’t as rich as other forms of television. Unlike cable networks, diginets do not enjoy a dual revenue stream. They rely solely on advertising.

With the exception of Sony’s getTV, which leases subchannels from stations, the classic diginets partner with their affiliates, splitting the ad inventory. Such barter deals are typically 7 minutes per hour for the diginet owner/distributor and 5 for the station. Or occasionally it’s a 6/6 split for just 12 or so minutes per hour.

The classics are aiming to hit a nerve with an increasingly older population. Within four years half the U.S. population will be 50 or older. And these folks will account for a whopping 70% of the country’s disposable income, according to a recent and largely unheralded Nielsen stat. 

That hasn’t escaped the notice of some media buyers. “Rerun channels? They offer a safe, predictable environment for advertisers,” says Brad Adgate, SVP and director of research at Horizon Media.

Another statistic of note: Between 10% and 15% of U.S. households still rely on rabbit ears for reception, per Consumer Reports, and now these holdouts can receive diginets along with the established over-the-air networks signals. Ditto for so-called cord-cutters, whose ranks are inching up.

Because they are largely backed by Hollywood studios and/or station groups, the classic diginets’ coverage of the country is greater than most other diginet genres. As a result they have Nielsen ratings data to entice prospective advertisers.

The race is now on for each of their backers (and the affiliate stations that carry them) to hone these services into a destination on the dial and a place in the daily lives of the audiences they are trying to captivate.

THE ME-TV M.O.

In the last few months, Me-TV, which relies on series from the 1950s through the 1980s, has lined up full-power stations in New York, Philadelphia and Dallas, bringing its total to 157 affiliates. Some 60 discrete series are scheduled each week, ranging from Perry Mason to The Brady Bunch, Gunsmoke to Gilligan’s island.

According to Sabin, Me-TV’s approach involves constant tweaking of the schedule and attention to branding and promotion. For example, on the celebration of her 90^th birthday, Doris Day was enticed to come on-air and introduce episodes of her favorite series.

Often, Me-TV ranks in the top third of rated cable outlets nationally, according to Sabin. He notes that its latest primetime addition, Welcome Back Kotter, outperformed cable competition in April that ranged from The Rachel Maddow Show on MSNBC to ESPN 2’s SportsCenter Prime to Bio’s Flipping Vegas. 

“Profitable? We definitely are,” Sabin says. “And to be so, it’s fine to hit doubles and triples. Not everything has to be a homerun in this business.”

COZI’S RELAXING NICHE

Other services are trying to get their batting averages up as well. One is NBCUniversal’s Cozi TV, whose very name bespeaks its strategy.

“We’re all about easy-to-watch series, with some movies sprinkled in on Friday nights and the weekend. The idea is to sit back and relax and not be embarrassed if a grandmother or a child joins you on the sofa,” says the diginet’s CEO, Meredith McGinn.

Cozi evolved from Nonstop, a network comprising contributions of original programming from each of the NBC O&Os. But when that model proved too difficult to sustain, the station group turned to the tried-and-true programming off the shelf and rebranded as Cozi.

“We knew there was a smarter way to pool our resources and put together a package that would be compelling and consistent,” McGinn adds.

Among its offerings are Fantasy Island and Charlie’s Angels as well as Maverick and The Avengers. Hart to Hart will be added in July and Knight Rider and Starsky & Hutch shortly thereafter. Much of the programming derives from NBCUniversal’s vast library but, like most all the players, acquisitions are from multiple sources and exclusive for multiple years.

McGinn is quick to point to “the iconic connections” that viewers have with certain shows — an auto dealership owner who got excited about taking ads on the subchannel in his market because he and his wife are huge fans of Charlie’s Angels; others who can’t get enough of Lassie or Farrah Fawcett.

“We have a very engaged fan base on social media,” McGinn explains. As with any network with affiliates, “we’re constantly supplying promotional links [think David Hasselhoff and Justin Timberlake, who’ve done their bits for the cause] and other tools to the local sales teams.”

Although so far in just over half of the country, including the 10 NBC owned stations, McGinn said the priority going forward is multi-pronged. “We have to drive distribution by keeping our appeal fresh and consistent.”

Just yesterday (June 17), Cozi announced that it signed eight additional stations, in South Bend, Ind.; New Orleans; Tulsa, Okla.; Honolulu; Colorado Springs; St. Croix, U.S. Virgin Islands; KFFV Seattle; and Pittsburgh.

THE GETTV DIFFERENCE

Similarly, at the classic movie channel getTV, which has been live only since February, managers stress that their aim is “to curate from the ground up.” It relies mainly on film titles from the 1930s through the 1960s, and is backed by Sony Pictures Television. So far it has cleared about half the country thanks mostly to carriage deals with Univision and Cox Media. Unlike other classic diginets, it relies on subchannel leasing, rather than barter deals to secure agreements with stations.

“We wanted to create an elegant, hand-crafted look and feel to the channel,” says Superna Kalle, SVP and general manager of getTV.

What’s more, “we want to harness the passion of the universe of people who love these movies,” adds Geetanjali Dhillon, getTV’s VP of marketing and digital strategy. The two recently organized a promotional event tied to an AARP gathering in Boston, at which attendees could experience classic Hollywood ambiance by dressing up like Irene Dunne, Bette Davis and other stars of the era.

ANTENNA’S YOUNGER SPIN

Another bullish player in this sector is Antenna TV, which is backed by the Tribune station group and targets a slightly younger demo than some of its rivals (think The Nanny as well as Bewitched). It too is cleared in a wide swathe of the country, not only on Tribune outlets but on many Cox, Gannett and Scripps stations, among others.

“We think of Antenna as how TV was meant to be,” says Sean Compton, president of programming for Tribune Broadcasting. The offerings are mainly shows “our audience grew up with,” which have “long-lasting appeal” and dramatize “timeless issues.”

Tribune has doubled its bet on classic diginets by becoming the operational manager of MGM’s widely cleared movie channel This — just as Me-TV has a similar arrangement with another film-centric channel, Movies!, in partnership with Fox.

Compton says that Antenna is a profit center. “There are real dollars to be made locally too,” he adds. For example, on a WPHL Philadelphia subchannel, Antenna’s Green Acres scored a 0.3 rating in the 25-54 demo in the first nine days of May, besting Seinfeld on TBS, The Waltons on Hallmark and a movie on AMC. 

On KIAH Houston’s subchannel, Antenna’s All in the Family (8-9 p.m.) and Three’s Company (11:30 p.m.-midnight) have been beating repeats of Duck Dynasty on AEN as well as shows on HGTV, History, Discovery and Bravo, among others, according to Compton.

NEW CLASSICS UP AHEAD

More classic diginets are on the way. Katz Broadcasting is readying two for launch this August: Escape and Grit. With its latest commitment from Raycom Media, the diginets will debut in at least 45% of homes.

Jonathan Katz, the CEO-president of Katz Broadcasting who doubles as COO of Bounce, explained that his upcoming Escape channel is a mystery and crime-focused service for women 25-54. “It’s going to be daring and sexy,” he said. As for his new war and westerns-focused Grit, aimed at men: “It’s going to appeal to those who relish classic male action heroes, from John Wayne on.”

Katz believe the two newcomers will be “the country’s first ever male-centric and female-centric broadcast networks.” He claims they are different from rivals in the classic genre. Most of the others are “generic brands with generic names, created by studios to serve the studios,” he said.

Univision, which is a Bounce backer, is coming aboard as one of the launch partners for Escape and Grit, even though the two new channels are aimed at general audiences, not any specific ethnic group.

Most cable networks that started with old TV stations and movies have evolved into more conventional networks with plenty of original productions to distinguish themselves and draw larger audiences and the advertising dollar that follow.

But none of the classic diginets seem in any hurry to incur the high cost of originality.

Antenna’s Compton put it best: “You’d have to have a huge marketing budget. And besides, I’m not convinced [doing originals] wouldn’t alienate our core established audience. They don’t tune to us to watch Breaking Bad. ”

This is part 2 of TVNewsCheck’s three-part annualMulticasting Special Report. You can read the other stories here.