BRAND IN TROUBLE: Oxygen huffs and puffs along

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Give this to Oxygen Media, the much-ballyhooed women's cable and Web venture: It had one helluva of a PR team. Not that the job was so hard. The mere mention of Oxygen pre-launch seemed to create the kind of fascination among the bicoastal media elite that hadn't been seen since, well, only the year before with Tina Brown's Talk.

There was the snazzy name and the backing of perhaps the most popular woman in America, Oprah Winfrey, and one of the country's richest men, Paul Allen. There was Chairman-CEO Geraldine Laybourne, known for making Nickelodeon a cable superhero, and the renowned TV trio of Marcy Carsey, Tom Werner and Caryn Mandabach of "Cosby Show" fame. And the launch came before the Internet crash, meaning plenty of observers thought the TV-Web interlink would lead to an initial public offering as successful as Martha Stewart's.

Still, Oxygen's PR spinners made the most of it, ensuring the enterprise became a Page Six-Vanity Fair-worthy operation with its eponymously timed 02-02-2000 launch (the Web site had a lower-profile start in 1999). Now, a year and a half later, the question is whether the team did too good a job.

"I would say it's hard to manage expectations when you have Oprah and Carsey-Werner-Mandabach and Gerry behind it," said Debby Beece, Oxygen's president-programming.

Plain and simple, Oxygen has failed to live up to the hype. It has yet to establish one of the vital organs of a cable network: a foundation to build a hungry viewership. ESPN had "SportsCenter," Fox News Channel had Bill Clinton, and the Food Network has Emeril. And it has struggled with the other vital organ: household distribution. The network launched in only 10 million homes, barely a dot in the ever-growing cable universe-though largely in line with other recent startups. Figures from Kagan World Media show the average first-year distribution for 12 networks launched since 1996, including Oxygen, is 7.2 million homes.

At the end of this month, Oxygen will expand to 24 million homes, still, however, a bit player as far as distribution goes. Oxygen has also had to scale back its goal of becoming a multimedia leader, as the Internet failed to take off as a lucrative ad medium.

But Oxygen is still breathing. Criticized during the IPO gold rush for even bothering to launch a TV network with its Web sites, the decision now looks smart as cable networks are the darlings of media giants from Viacom to Walt Disney Co. After failing at one of the marketing basics-don't get people all excited about something they can't get-the network continues to build the distribution it needs to compete for viewership and advertisers with more established networks that reach 60-million-plus homes-albeit slowly. And the network is working to differentiate itself from Lifetime by trying to convey an image that's hipper, lighter and more stylish in hopes of grabbing a younger viewership. It wants to be MSNBC to Lifetime's CNN.

"It's way too premature to write them off," said Andy Donchin, senior VP-Aegis Group's Carat USA, New York. "It's hard for them starting now to get viewers to sample them with all the abundance of cable networks out there. When Lifetime got its foot in the door, there were a lot fewer networks."

As buzz-heavy media plays go, Oxygen hopes it will one day be equated less with Tina Brown's Talk and more with DreamWorks SKG. Formed by Steven Spielberg, Jeffrey Katzenberg and David Geffen in 1994, the company not only sought to be the first new major movie studio in decades, but to be a multimedia giant with TV production and music labels. Like Oxygen, it has had to rein in its aspirations after some hiccups, but has sculpted a successful niche as a movie generator with hits such as "American Beauty" and "Shrek."

"I think we're experiencing a rather typical rollout for a new network," Ms. Beece said. Privately held Oxygen maintains it will turn a profit in 2003, though it has not released any financials so far.

Company executives believe distribution has been its biggest hurdle. Oxygen's reach over the next few years is expected to be driven by deals with six major cable operators (including the U.S.'s largest, AT&T Broadband), which have promised to carry it in 70% to 80% of their homes within the next few years in exchange for investment options. The network says it will be in 42 million households by 2003. That three-year growth would top the 11 other networks launched since 1996 tracked by Kagan.

In January 2000, before the Oxygen launch, then Time Warner President Richard Parsons was asked after his company's America Online merger announcement whether it would offer Oxygen on its cable systems. "Oxygen, Oxygen," he thought aloud. Then he took a step away, before turning back to say, "Gerry's one of my favorite people."

It took a while, but now AOL Time Warner Co-Chief Operating Officer Mr. Parsons' expressed affection for Ms. Laybourne is paying off. In April, Oxygen received a huge breath of fresh air when AOL Time Warner increased its minority stake in the company and agreed to make the network available in 10 million of its homes, including the plum New York market. But it will roll out gradually there; so far it's only available to digital cable subscribers.

Oxygen, not alone in its Web hurdles, may have been ahead of its time with the idea of connecting the TV and Web products so closely. Major media companies such as Walt Disney Co. and News Corp. have abandoned plans to make Web sites distinct brands and instead have linked them more closely with their networks-albeit mainly as promotional vehicles for TV-partly adopting the Oxygen model. Still, Oxygen has shifted its priority to its TV network. "There's been a reality shift in the marketplace for sure on online, but we're still committed to being a converged service," Ms. Beece said.

"Oxygen was very ambitious in what they wanted to do with technology," said Chris Geraci, senior VP at Omnicom Group's OMD USA, New York. "I'm not sure the world is really there yet." Besides the greater distribution, Oxygen could receive a boost in January when it becomes Nielsen-rated. Advertisers often shy away from non-rated networks since gauging effectiveness can be hard. Oxygen said it had three charter advertisers last year-Procter & Gamble Co., Johnson & Johnson and Hewlett-Packard-and all but HP have re-upped.

The network hopes advertisers will be attracted to its new lineup and ratings will show it performs well among younger women. Forget the tears and cheers of Lifetime: Oxygen aims to be more fun and contemporary with a focus on helpful information-and men. "Your Money and Your Life" provides financial advice. And actress Carrie Fisher is set to host a show this fall, "Man Talk," which she recently said she would rather call "Men I Would Like to Sleep With if I Were Younger and Had a Better Body." Her first guest: Ben Affleck.

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