Oxygen: Inflated Expectations?

Maybe women don't need more women's programming

The setting: A pre-Christmas party at Oxygen Media Inc.'s Sunset Boulevard production studio. The mission: to woo cable-system operators to carry Oxygen's startup cable-TV network for women. The music: Whitney Houston's I'm Every Woman, pumped through loudspeakers. The pitch: "Men watch TV with one hand down their pants and the other on the [TV remote] control," TV producer and Oxygen co-founder Caryn Mandabach tells the group. "Women watch TV with a Krispy Kreme donut in one hand and a martini in the other--and they don't need a remote because they're just watching Oxygen!"

Clearly, this was no time for subtlety. After all, to get Oxygen airborne, close to $450 million had been raised and 560 people hired. Yet for all the hype, resources, and talent behind it--including Nickelodeon founder Geraldine Laybourne, TV hitmaker Carsey-Werner-Mandabach Co., and media icon Oprah Winfrey--Oxygen is about to launch with a whimper: Only 10 million of the nation's nearly 100 million households with cable-TV will carry the channel when it makes its debut on Feb. 2, and its Web site, in operation since last year, isn't among the top Net destinations for women.

Of course, low numbers out of the gate aren't unusual for startups. And at the rate Oxygen and Laybourne, its chairman and CEO, are getting attention, its Web hits could soar in no time. To expand Oxygen's cable presence, Laybourne is putting her backers' money where her mouth is--spending $100 million to produce all-original programming from a nightly talk show hosted by Candace Bergen and a series called Oprah Goes Online to cartoons.

AMBITIOUS. On its face, New York-based Oxygen is as ambitious as any new media launch to come along in a while. It's also based on a business concept fraught with questions. How will it succeed online against established Web rivals such as Hearst-led Women.com Networks and iVillage Inc.? Is it going after too broad an audience, targeting everyone from teens to their moms? How can it generate basic cable fees when most other new cable networks have had to pay operators to carry them? And the biggie: Is the gender that makes up 52% of the population really, as its founders claim, an "underserved" niche?

Laybourne likes to use figures that go like this: Women control 85% of all personal and household goods spending. Ergo, the vast majority of the $186 billion a year spent on advertising should be targeted exclusively at them. This market, she believes, dwarfs the children's one she brilliantly tapped when founding Nickelodeon. Before Nick, kids' programming was limited to Saturday mornings, after-school shows, and dollops of Disney.

Trouble is, there's a whole lot more media serving women--for better or for worse. Newsstands are spilling over with women's magazines. Much of network TV is skewed toward women (Ally McBeal, Judging Amy), not to mention their daytime lineups. Then there's Lifetime Television, the women's cable channel carried in 75 million homes. Lifetime's new CEO Carole Black has been beefing up its original programming and planning a revamp of its Web site. "I would never say that women are underserved," says Ellen W. Oppenheim, senior vice-president and media director at ad firm Foote, Cone & Belding in New York.

No doubt, Lifetime could use a little competition. It has been criticized by some for its light fare and "women in peril" programming. But other would-be rivals haven't been as bold as Oxygen. A women's channel, tied to content culled from Time Inc. and Conde Nast Publications Inc., was announced and aborted by cable channel giant Turner Broadcasting Systems Inc. last year. Insiders there cited the high cost of doing all-original programming for pulling the plug.

Still, many believe Oxygen has staying power--especially if it can capture a strong following on the Net. Only 29% of U.S. women were on the Web in 1999, according to Forrester Research Inc., but close to 50% are expected to be surfing by 2003. Women also make the majority of household spending decisions, from health care to buying computers.

The challenge Laybourne--and her top online rivals Candice Carpenter at iVillage.com and Marlene McDaniel of Women.com--face is that it's not clear that women want "women's" programming on the Web. "Just because you label yourself a women's Web site doesn't mean you'll attract women," says Forrester Research analyst Ekaterina O. Walsh. And Oxygen runs the risk of turning some women off with a brash, in-your-face attitude that Laybourne calls "very proud, very rowdy."

Even in a crowded market, there's always room for excellent programming. Oxygen's success will depend on whether it builds a loyal audience and not whether it's geared toward women. Just look at HBO. Although it is ostensibly a pay-TV movie channel, original programs such as The Sopranos and Sex and the City are what's hooking in new viewers. Nothing helps a new cable channel get picked up better than viewers clamoring for a hot show.

Right now, Laybourne faces an uphill battle convincing cable operators, particularly in New York and parts of Los Angeles, to carry the channel on their basic service, with Oxygen drawing a monthly fee. She may benefit from the planned merger of America Online Inc. and Time Warner Inc., because AOL is one of Oxygen's backers. So far, Time Warner hasn't agreed to carry Oxygen on its cable systems. To break even by 2004, Laybourne needs 50 million cable subscribers. Even with all her experience, gusto, and connections, it could be a while before Oxygen can breathe easy.

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