On a segmented dial, digital cuts wire finer

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The digital dial is getting crowded, creating opportunities-and a few dilemmas-for advertisers looking to reach more narrowly defined audiences.

Whether it's A&E and its Biography or History Channels; MTV and its MTV2, S and X channels; Discovery Networks and the six spinoff digital networks it has spawned; or a host of other popular networks with new digital offspring, the digital universe is brimming with new channels. Each caters to subsets of viewers of the original networks with 24-hour saturation in a particular genre.

As digital options expand, programming companies face the challenge of getting carriage in the tight universe of installed digital set-top boxes.

"When you're constrained by a physical limitation like digital set-top boxes, it's very hard," says Channing Dawson, senior VP-new ventures with Scripps Networks, which operates basic cable networks Home & Garden Television and Food Network, each of which has spawned digital offshoots. "It's a matter of training for the multisystem operators and satellite guys to get the right box [to] consumers and teach them what the box provides."


As spinoffs, many digital networks receive minimal direct ad support on other media, says John Zamoiski, CEO of Vertical Mix Marketing, a media and entertainment marketing consultancy.

Instead, these children of full-carriage analog distribution networks are touted within the content of or in ads running on the more established parent networks, and by requesting marketing support from cable operators, Mr. Zamoiski says. It benefits all: The networks get exposure, and the cable operators are able to tout their digital offerings and presumably sell more set-top boxes, he says.

Still, some observers have suggested the explosion of spinoffs and vertical programming might cannibalize the primary network's viewership or advertiser base, or dilute the power of the parent cable network's brand.

But Steven Gigliotti, senior VP-advertising sales with Scripps Networks, believes differentiated content between related analog and digital networks will draw a wider audience base and ultimately stave off cannibalization. "These are very rich, deep niches," he says.


Larry Gerbrandt, chief operating officer at media consultancy Paul Kagan Associates, says the rush to develop digital networks is about market share.

"Every network is trying to control as much real estate as possible" on the TV dial, Mr. Gerbrandt says, asserting that digital programming expands cable networks' offerings and provides fresh opportunities for advertisers.

Some of the best known examples of digital networks-Discovery Science and Discovery Kids, Style from E!, MTV Networks' Noggin, Nickelodeon's GAS and Nick TOO, or Home & Garden Television's Do It Yourself Network-got carriage on increasingly tight digital set-top boxes because of the success, longevity and brand clout of the mother networks, Mr. Gerbrandt says.

For A&E, which currently reaches 80 million households, the obvious choice was to create networks around some of its most popular genres.

Those include the History Channel, which reaches 70 million households through both analog and digital distribution, and Biography Channel, which has hit 7 million mostly digital households since it launched in November 1998, says Michael Mohamad, senior VP-marketing for A&E Networks.

Today, ad inventory on the networks, related Web sites and various print vehicles are sold individually or together, he says. Biography also has morphed into books, games and international channels.


Each brand extension and network has its own audience, and each audience has its own demographics and psychographics, he says. Some watchers of Biography Channel were predominantly watching that show on A&E, and have become more loyal to the new network than the old, Mr. Mohamad says.

"This shows the extent to which a brand can be developed. It's almost like viral marketing. We have a lot of cross-pollination," he says. "The idea is interesting to different people in different ways."

For a network like Discovery Channel, consumer acceptance of several of its more popular content areas made a compelling argument to launch new networks on satellite and digital set-top boxes, says Charles Humbard, senior VP-general manager with Discovery Digital Networks.

The company's digital offerings consist of Discovery Science, with 10 million subscriber households; Discovery Kids, with 7 million; Discovery Civilization, Discovery Wings and Discovery Home & Leisure, with 5.5 million each; and Discovery en Espanol (1 million). The networks tap much of their content from the libraries of Discovery Channel, The Learning Channel and Travel Channel.

The six digital networks have enabled Discovery to target programming to suit specific advertisers' needs, Mr. Humbard says. Discovery's Animal Planet, now a traditional analog offering, began as a digital product.

To launch each new digital network, Discovery looked at what content worked in analog, and whether it could support 24-hour programming. Wings, for example, was first a Discovery Channel show about manned flight. It enjoyed strong viewership, and Discovery's programming executives knew ample content existed to expand on the topic. Today, the digital network delves far beyond aircraft to include the personalities behind the science and industry of aviation.

"We're giving consumers more of what they want. The more defined the channel, the more predictable the audience," says Mr. Humbard. "We're able to deliver a much more highly targeted and specialized audience than the traditional basic cable audience."


At HGTV, knowing viewers were hands-on project enthusiasts-and that they had five years and 10,000 videotaped projects worth of content compiled from HGTV-convinced network executives to launch the Do It Yourself Network in September 1999, Scripps' Mr. Dawson says.

Do It Yourself now reaches 2.5 million households and has advertisers such as Black & Decker Corp. and Lowe's Home Centers, each of which also advertises on HGTV, reaching 69 million. Later this year, the company will launch the digital Fine Living Network, tapping content from HGTV and Food Network, Mr. Dawson says.

Calling HGTV's content a "mega-niche," Scripps is exploring further opportunities for vertical programming and spinoffs in the five topic areas the network serves: building and remodeling, design and decorating, gardening and landscaping, crafts and collectibles, and special-interest content, he says.


Mr. Humbard notes that in the future, successful digital networks will become stand-alone products. He scoffs at the notion that the digital upstarts could be diluting the parent brand. The digital Discovery networks are striving to build on Discovery Channel's 25-to-54-year-old base with a wider group of viewers. Science, for example, targets the 18-to-34-year-old viewer, and Kids draws in youngsters who can grow with the Discovery brand, he says.

This has served to lure deeper commitment from advertisers, and not just a redirection of existing ad dollars, he says. Among the growing marketer categories are automotive, financial, insurance and pharmaceuticals. In this year's upfront market, Discovery planned to break out the new digital networks for individual sale or packaging with the Discovery or Learning channels.

"It's actually reinforcing the [Discovery] brand," Mr. Humbard says. "You have a group of ... channels bringing a focused audience. Once you aggregate these channels, you'll be able to reach 45 million consumers."

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