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LONDON-A hit with both viewers and advertisers as a pan-European satellite TV channel, MTV Networks Europe sees its future growth coming from thinking locally.

In two key moves, national ad buys are being created on the MTV Europe channel that has plugged pan-European advertising since its 1987 introduction, and VH1, the company's baby boomer music channel, is rolling out in a format tailor-made for each country.

The new think-locally strategy is already proving so effective that MTV Networks will apply it next in Asia.

MTV Europe's access to 59 million cable and satellite homes has made it one of the few successes in pan-European TV. Last year, the network served 300 advertisers, up from 250 in 1993.

"In 1994, ad agencies spent 10 times more time talking to clients about pan-European advertising," said Frank Brown, exec VP-international, MTV Networks.

But Mr. Brown, who recently was promoted from MTV Europe/VH1 U.K. ad sales director, isn't turning a blind eye to tough competition coming from aggressive local music channels.

Cologne-based Viva, an ad-supported German-language service introduced in December 1993 by record companies Warner Music Group, Sony Music Entertainment, Thorn EMI, PolyGram and German mail order giant Otto, now reaches 90% of German cable TV homes. Its operators have applied to set up a second, VH1-like service for older viewers called Viva 2 to go on air this year.

Viva's advertisers include Dickmann Brothers, a local chocolate marketer; video producer Warner Entertainment; and Kraft Jacobs Suchard.

MTV Europe is retaliating in Germany, its biggest national market, reaching 20 million cable and satellite homes, offering advertisers local commercials between the pan-European music programming.

Two minutes of every hour between noon and midnight are slated for local advertisers on MTV at $1,656 per 30 seconds. A 30-second spot on Viva sells for $1,688.

Local spots are also available in Italy because of the fierce rivalry with Videomusic, a local rock-and-pop over-the-air channel owned by the Marcucci Group, which owned Super Channel before selling it to NBC. Videomusic earns an estimated $20 million from national advertising annually.

Other European competitors include MCM-Euromusique, a French cable music channel available in 13 countries.

In September, MTV Networks introduced VH1, its first channel with programs tailored to a local market. But it has not abandoned its pan-European advertisers, some of whom are also buying airtime on VH1 U.K. The latter is aimed at 25-to-49-year-olds in more than 3 million British cable and satellite homes.

VH1 aims to complement MTV Europe, a plan that appeals to jeans marketer Levi Strauss & Co. "Although VH1 is for an older audience, we've learned that one-third of its audience is from the [jeans-buying] MTV age group," said Steve Clark, group media manager at Levi Strauss' agency Bartle Bogle Hegarty, London.

The Media Centre, London, buying airtime for Anheuser-Busch's Budweiser beer, uses VH1 to circumvent regulatory obstacles that could be caused by advertising alcohol on a pan-European network, said Andrew Smith, the Media Centre's head of TV buying.

VH1 U.K. now claims more than 100 advertisers, including Nestl‚, Procter & Gamble, Unilever, Nissan, Volkswagen and Compaq. MTV's next move will be a tailor-made VH1 channel for Germany.

"I see no reason why we won't consider VH1 for other European markets," outside of the U.K., Mr. Brown said.

"It would have been difficult to introduce a pan-European version for VH1 because there aren't that many similarities in the lifestyles,I-20

MTV's hip new strategy: Go local culture or history of TV's older viewers in the different European countries," he said.

The advent of digital compression technology in Europe in about 18 months will enable MTV Networks Europe to transmit different versions of MTV and VH1 using the same signal. Advertisers will be able to run commercials simultaneously in local languages in any combination or assortment of countries.

Mr. Brown's accomplishment in Europe has encouraged MTV Networks, the New York-based parent company, to appoint him VP-international to spread the panregional and national advertising philosophy to MTV in Latin America, Japan and Asia.

"MTV Europe has been seen to be a very successful blueprint for advertisers" in other parts of the world, said Mr. Brown, who is moving to Singapore to introduce MTV Asia and MTV Mandarin this spring.

"For everywhere outside the U.S., my role is to bring the MTV Europe experience to other affiliates, specifically on advertising."

Asia will not be easy. It will be the second time MTV Networks has tried to conquer the region. In its first attempt, disagreements with carrier Star TV forced MTV Asia's shutdown last April.

It will be reincarnated as two 24-hour satellite services: MTV Asia and MTV Mandarin starting April 15 and May 3, respectively.

Mr. Brown will be based in Singapore; offices are being set up in Bombay, Taipei and Hong Kong, including ad sales staff.

MTV Asia will be broadcast in English and aimed at India and Southeast Asia. It will also feature some programs in Hindi for viewers in India, South Asia and the Philippines. MTV Mandarin is for Taiwan, China, Singapore and Hong Kong.

"The advertisers' situation here is much more complicated," Mr. Brown said. Musical tastes differ, the national broadcast regulations are much more intricate and distribution is also haphazard.

In addition, Asia is the only part of the world where MTV has a direct panregional competition. It is called Channel V, a music video service on the Star TV satellite broadcast system, with a potential reach of 220 million homes across Asia. It transmits programs in English and Mandarin.

To add to MTV's potential woes, record company giants Sony Music, Warner Music, EMI Music and BMG, some of whom are also involved in the German service Viva, have acquired a 12.5% stake each in Channel V.

"Of course, we hope some of the advertisers [from the old MTV Asia] will come back and use us again," said Mr. Brown. "But the important issue is to make a connection with the consumer."



International satellite TV operators have embarked on radical changes in response to the demands of viewers, advertisers and regulators. Most of the big players initially planned to transmit the same programs and ads globally. But local laws and viewers have turned out to be less homogeneous than originally envisioned.

Consequently, networks are localizing programs and advertising to meet national needs and counter rival local broadcasters.

MTV Europe, for example, is offering marketers customized advertising, and sister network VH1 is tailoring itself to the different European markets, including the U.K. and Germany.

To counter attacks that it is too American, TNT/Cartoon Network is linking with European animators to create local programs. And sports channel ESPN, grappling with language and cultural issues, is breaking down its distribution into smaller regions, with programs more relevant to the different parts of Asia.

Section coordinated by Juliana Koranteng.

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