Leading Edge: Showtime, MTV gamble on gay net

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Jenn Tosatto likes the deadpan humor of the HBO hit "Six Feet Under" about a dysfunctional family-owned funeral business. But it's the character of David, a gay man wrestling with his sexuality, who most appeals to the 19-year-old sophomore and co-president of a gay and lesbian support group at Southwest Missouri State in Springfield, Mo.

"We have a lot of coming-out issues that we deal with," she said. "It's nice to see that addressed on the show."

Shows with gay themes such as "Six Feet Under," Showtime's "Queer as Folk" and NBC's "Will & Grace" appeal to Ms. Tosatto and her friends, who live away from major urban centers-one of the reasons she's excited about the prospects of a breakthrough gay TV network being developed by Viacom units Showtime and MTV.

"A feeling of community in a place like Springfield-podunk-Missouri is a lot less than, say, a place like New York or L.A., so that sense of being a part of something would be great," she said.

The gay network, which could launch later this year, faces formidable challenges: getting distribution from cable operators, some of which may be squeamish about the subject matter; attracting mainstream advertisers; and signing up subscribers, who already have access to growing gay-themed content on broadcast and cable TV.

spending power

Gays and lesbians have $350 billion worth of spending power by one estimate, making them a lucrative target market. Marketers, including such mainstream advertisers as Absolut vodka and American Express Co., currently spend about $120 million a year in gay media, according to Doug Shingleton, associate publisher of Genre, a gay men's monthly. "It's a market that has proven its loyalty to those advertisers which support gay-themed titles and entertainment," he said.

Some advertisers may welcome a TV option if the channel attracts a critical mass of subscribers, although TV time is more expensive than print and Web ads and could require budget increases. Marketers that buy time on the channel would also have to decide whether to invest in producing gay-themed TV commercials.

The still unnamed network will first look for distribution via satellite and digital cable. Consumers will have to request the channel and pay about $5 a month to subscribe, as they do for such networks as HBO and Showtime. By including ad support, Viacom creates a business with two revenue streams.

The gay media marketplace mainly consists of magazines and Web sites, such as Liberation Publications' The Advocate and Out, Genre Publishing's Genre, and PlanetOut Partners' Gay.com and PlanetOut.com. None offer the potential mass-market impact of national TV.

"There are a few mainstays we always turn back to ... but [they're] few and far between," said John Bertorelli, a media planner at Publicis Groupe's Optimedia, New York. He's skeptical about the network's chances, but expects marketers would support the channel if it finds an audience.

Securing distribution will be a key challenge, both in terms of generating subscription revenue and building an audience large enough to appeal to national advertisers. An independent gay-targeted venture called the Triangle Television Network has yet to find any distributors since it began trying six months ago. But Viacom has much greater clout with cable operators.

Howard Buford, CEO of Prime Access, New York, an ad agency that specializes in marketing to gay and minority communities, likens the network to the Playboy Channel. "Some cable operators may not want to offer it, but ... it doesn't offend anyone because you have to subscribe to it to get it," said Mr. Buford, who consulted on the Viacom channel.

Playboy Channel, which has no advertising, is part of a family of networks available in some 33.5 million homes.

Media executives, however, caution that much depends on the network's programming. "It all depends on whether you can generate hours and hours of really good content," said Jeff DeJoseph, chief strategic officer and exec VP, Omnicom Group's Doremus & Co., New York.

Viacom plans a mix of news and information shows, comedies, dramas and films. Showtime and MTV "both believe this is a sizable market that has been underserved, and some early test results have indicated that there's real vitality in creating a channel targeting this audience," said Mark Greenberg, Showtime exec VP-corporate strategy and communications.

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