Cable systems are inundated with new cable networks and new programs already clamoring for distribution. And, many industry insiders still say it's too early for a computers-only network, when less than half the population owns a PC.
Despite the distribution dilemma and its own checkered history in cable TV -- two previous Ziff-Davis computer TV shows failed on cable -- the company is unwavering in its commitment to ZDTV.
The reason: Ziff-Davis recognized that computers and the Web are going mainstream, and the company wants to be first to market with a channel dedicated to the topic.
How soon can ZDTV expect to gain enough distribution to make the concept viable?
"That's the 64 million dollar question," says an executive with one ZDTV charter sponsor who likes the concept but wonders about distribution.
Or maybe $54 million: That's how much money ZDTV is expected to chew through this year, according to Ziff-Davis' filing for its planned April initial public stock offering.
Executives at ZDTV and Ziff-Davis have acknowledged the tough issue of gaining distribution since the day the channel was announced last May.
"It certainly is a challenging time" to launch, given that many systems don't have room for more channels, admits Larry Wangberg, ZDTV's CEO.
ZDTV has announced a handful of agreements with cable operators. Mr. Wangberg says he's talking to the top 20 systems as well as direct satellite services.
Distribution challenges aside, Ziff-Davis Director of Corporate Relations Greg Jarboe insists: "The line we were using a year ago we could use again today. In the year 2001, can you imagine the world without a cable TV channel devoted to computers and the Internet? We can't imagine that either, and that means the time to start building one is now."
Mr. Wangberg wouldn't answer many questions about distribution, ad deals or ZDTV's ties to Ziff-Davis, citing the "quiet period" around the stock sale.
Mr. Wangberg contends ZDTV over time will gain broad distribution because it can give cable systems and advertisers a way to connect with a growing market: Consumers with interest in computers and technology who are devoting more time to PC's and less time to TV, but who might be lured back to the tube with compelling content about computers.
Mr. Jarboe says Ziff-Davis knew a year ago that distribution would be "the primary issue going forward. . .We're going to take a long-term view on that."
TARGETING 25 MILLION
Ziff-Davis Chairman Eric Hippeau a year ago forecast the channel would reach 20 million to 25 million households by 2000.
Mr. Wangberg bets half of U.S. homes will have a PC within a year, vs. about 45% today. He's aiming ZDTV at the mainstream: Out of 107 million people in the U.S. who use a PC at work or home, ZDTV is creating a variety of programs for the 100 million in the middle.
ZDTV won't specifically target the remaining 7 million, consisting of information services professionals at the highest end -- a group Ziff-Davis reaches with print and Web properties -- or computer neophytes at the low end.
"We're not setting out to gear programs or shows around the newbie or around the [information services] professional, but around the sweet spot in the middle," says Mr. Wangberg, a 20-year cable veteran who joined ZDTV last September.
ZDTV will include both the cable channel and an ambitious Web site, allowing viewers to use the Web to interact with live TV shows. Mr. Wangberg, citing a study showing that 40% of home Web surfers also have the TV on, says the ZDTV Web and TV combination makes sense.
"Many people already have converged the computer and the television," he says.
TRYING A TWIST
One clever twist: ZDTV and 3Com Corp. struck a deal to distribute 10,000 3Com "netcams" to a mass of PC users ranging from teen-agers to industry insiders.
Using a netcam and a PC, these pundits-to-be may appear on ZDTV TV shows live or by video e-mail using the Internet.
ZDTV, sending out one national feed, will start with five-and-a-half to six hours of original programs repeated during the day. Programs will range from "Internet Tonight," a show pitching the best of the Web to "Silicon Spin," featuring tech industry insiders.
Rivals, not surprisingly, question if ZDTV will gain enough distribution and audience.
"I just don't know if the market's ready," says Greg Osberg, president-sales and marketing for CNET, which produces tech content on the Web and on four weekly TV shows. "To go from nothing to that ambitious of an effort with absolutely no broadbase consumer experience in that company, I don't know."
There is plenty of reason for skepticism. Ziff-Davis' first TV show died in 1994 a few months after its debut on CNBC. Ziff-Davis followed that in 1996 with a highly touted show, "The Site," on MSNBC. Mr. Hippeau, trumpeting "The Site" to his worldwide sales meeting in 1996, pronounced early victory with the show, saying, "The rest will be history." By last fall, "The Site" was history.
Mr. Jarboe contends ZDTV learned valuable lessons. Ziff-Davis over the past year has beefed up its consumer-savvy TV talent, bringing in veteran executives such as Mr. Wangberg and MTV veteran Greg Drebin, senior VP-programming and production.
ZDTV has one overriding asset that resonates with tech advertisers: Ziff-Davis' reputation for delivering respected, quality products that have credibility with tech users and advertisers.
Ziff-Davis' advertising success has been with print publications and, more recently, Web sites appealing to a comparatively narrow band of tech users. Ziff-Davis' record in attracting a large mainstream consumer audience and advertising base is mixed at best.
In fact, ZDTV is not owned by Ziff-Davis. The TV/Web venture is owned by MAC Inc., a Japanese company controlled by the chairman of Softbank Corp., owner of Ziff-Davis. ZDTV is not included in the Ziff-Davis stock offering, an approach that shields Ziff-Davis from ZDTV losses.
Ziff-Davis has an option expiring Dec. 31 to buy ZDTV. That's dependent, according to Ziff-Davis' Securities & Exchange Commission filing, on whether ZDTV gets "sufficient cable carriage."
ZDTV could give an ownership stake to cable operators in return for distribution, the filing says.
These ownership issues could be transparent to advertisers since Ziff-Davis will be offering package ad deals including ZDTV.
Advertisers are willing to listen to ZDTV's pitch simply because it carries the imprimatur of Ziff-Davis. A year before launch, ZDTV signed about a dozen charter sponsors, including Microsoft Corp., Intel Corp., IBM Corp., Gateway 2000, Micron Electronics and Charles Schwab & Co., each believed to be paying $200,000.
Eric Koivisto, Microsoft Corp.'s ad director, says Microsoft is "optimistic and hopeful" about ZDTV.
ZDTV has "limited reach, but I hope it catches on," Mr. Koivisto said. "Someone's going to get this idea right one day, and they've got a good crew on board and some smart approaches."
ZDTV Exec VP Richard Fisher says he expects at least nine charter sponsors will come on as launch advertisers.
"We will launch with more than 20 significant" advertisers, Mr. Fisher says. "These are not people buying a couple weeks to see what we're like. These are people buying substantial packages" covering "the majority of 1998."