TV's New Parallel Universe

Top players are launching online channels to reach young viewers and big spenders

Steve Jobs may have signaled to the world that television would never be the same after he announced the video iPod on Oct. 12. But a group toiling in a suburban office west of Knoxville, Tenn., may have a more immediate impact on TV's future. Programmers, engineers, and ad sales folks at Scripps Networks Inc., a unit of E.W. Scripps Co. (SSP ), which owns cable channels Food Network and Home & Garden Television, were busy that day, as they have been for months, prepping for the launch of as many as 10 new channels in the next year or so -- on broadband. The first, coming to a high-speed Internet service near you as early as December, is still unnamed, but it will use short, informational video clips and interactivity to bring all manner of advice about kitchen design to people on their computers. "These new channels will allow us to do something we couldn't do on [traditional TV]," says John Lansing, president of Scripps Networks, "which is to dig even deeper into our specific topics."

Suddenly, broadband is opening the floodgates for a new kind of TV show -- only not on TV but online. In just the past few months some of the biggest TV names have announced new broadband channels, from MTV Networks to Comedy Central (VIA ) to ABC News. If you thought the 400 cable channels focusing on everything from golf to anime were already cutting niches thin, broadband TV is going a step further.

Besides kitchen design, Scripps is preparing to roll out gardening and woodworking channels. Walt Disney Co. (DIS ) has launched Disney Connection, a broadband outlet that offers games and video clips of Disney characters to kids. Oxygen Networks' Oh! Baby channel offers tips to new parents, including a regular feature, Kids Behaving Badly. MTV just appointed onetime Web designer Jason Hirschhorn to be its first chief digital officer, overseeing broadband strategies. Other TV titans, such as CBS Broadcasting Inc. (VIA ) and NBC Universal Inc., both with new media units, are preparing specialized high-speed offerings as well. "We want to be as agnostic as we can in delivering shows, sports, and news," says Bob Wright, chairman of NBC Universal. "That's why we've been so pleased to see how comfortable people are in getting programs in new ways."


It has the makings of another Internet gold rush. With improved speeds and video quality online, not to mention broadband's growing reach (estimated conservatively to be in 40 million U.S. homes by yearend), TV executives are rushing to connect with younger audiences that are less and less riveted to traditional TV. Getting a foothold on the Internet, especially if it creates buzz, is also a way to recapture ad dollars that have migrated away from the 30-second TV spot. On the Web, ads can be positioned strategically next to programming and measured with greater accuracy. Broadband may also allow executives, bound by the costs and the creative parameters of big-time TV, to take more chances. "This new distribution platform gives content creators a direct relationship with consumers without having to go through a [regional] cable or satellite carrier," says Jeremy Allaire, founder of Internet TV service company Brightcove, which has been hired by Viacom (VIA ), A&E Television Networks, and Oxygen Networks to help them create new broadband channels.


TV execs will need that kind of freedom as they go up against a slew of upstarts that are creating their own channels. And why not? The barriers to entry are incredibly low vs. TV. Essentially, if you have a $300 video camera and the software to create a site, you're in business. Even sophisticated TV channels are able to launch some broadband outlets for under $10 million. "The best programming is still going to be on TV in the next few years," says Richard Greenfield, an analyst at Fulcrum Global Partners LLC. "But after that, who knows?"

Watching a broadband channel, at least in these early days, is an altogether different experience from kicking back in the living room for a couple of hours. These video-rich offerings are fast-paced, with streamed segments that rarely exceed five minutes. If watching an hourlong episode of CSI: Crime Scene Investigation is akin to eating a five-course meal, watching a news snippet from broadband channel MTV Overdrive is a light snack.

So far, much of what's offered are abbreviated or behind-the-scenes versions of existing TV shows, but more and more programming will be made for broadband only. Larry Kramer, president of CBS Digital Media (VIA ), recently oversaw the revamp of his network's news and sports Web sites, with more broadband-friendly video offerings. He figures networks like his could use broadband as a testing ground for original shows, albeit in shorter form. And if they catch on, such shows could even make the reverse trip back to the network. The result could be, in essence, a new, lower-cost pilot system for TV. "It is all an experiment now," says Kramer. "We are going to have to learn what programming plays best in each format."

Meanwhile, broadband is proving to be liberating for all kinds of TV that's already on the shelves. At Comedy Central, which launched its MotherLoad broadband channel on Nov. 1, users can get their hands on more than 500 free comedy clips to e-mail to friends, including recent bits from new shows such as The Colbert Report. Up to 80 new clips will be added weekly, which if e-mailed among friends would be a promotional boon, says Michele Ganeless, general manager of Comedy Central. Studies show that over 80% of Comedy Central viewers have broadband. "We win," says Ganeless, "when they tune into both of our channels."

Broadband's flexibility enables outfits like Scripps to approach advertisers in new ways, too. For years the boast of standard TV was that it would one day offer interactivity, allowing couch potatoes to click deeply into ads to order products. The world is still waiting. "The long-held promise of iTV is here today -- with broadband," says Lansing. The fact that the U.S. has more than 25,000 bath and kitchen stores makes broadband even more alluring for Scripps since its new channels can sell classified ads to all those merchants. And what advertisers want most is to be next to video. Says Jeff Meyer, a senior vice-president for interactive sales at Scripps: "There is more money than the marketplace can handle right now for good, high-quality streaming video." One recent deal: Microsoft (MSFT ) Windows XP recently signed on to be sole sponsor of a 13-part, broadband-only cooking series with Food Network's Dave Lieberman.

After hearing terminal prognoses about television's future in the Internet Age for years, caretakers of the medium that started some 65 years ago are suddenly, if cautiously, starting to revel in all the possibilities. There's plenty still to be worked out, including rights issues for made-for-TV programming used elsewhere. And not everyone is ready to declare the sit-and-watch experience of regular TV dead just yet. What will be most important, as it has always been, says CBS's Kramer, is creating "great content." Without it you won't get an audience -- not for an hour, not even for five minutes.

By Tom Lowry

Before it's here, it's on the Bloomberg Terminal.