Diginets Struggle For Place On TV's Frontier

Multicasting — TV stations' incipient business of broadcasting programming on digital subchannels — looks a lot like cable 30 years ago. It comprises a proliferating array of low-cost networks, many of which rely heavily on reruns and movies.

And just like cable 30 years ago, multicasting is starting to gain a little traction with viewers and advertisers as the reach of the networks (aka multicast channels or diginets) steadily increases.

"There are a lot of options out there and station groups are now seeing these [diginets] as being stable, good options to be in bed with,” says Sean Compton, president of programming and entertainment, Tribune Broadcasting, purveyor of diginet Antenna TV.

But it is still not clear whether the diginets will prosper as cable networks have. All rely on advertising alone and, right now, much of it is of the direct response variety. There are no retrans fees from cable and satellite to help bear the costs and little prospect for them. It's a hard way to go.

"I’d be surprised if there’s anybody out there that is making any significant money at this point,” says Jim Trautman, managing director of Bortz Media & Sports Group, which tracks multicasting developments. It will continue to grow, but it is a "very long-term business proposition," he says.

It's still in "uncharted territory,” says Steve Ridge, president of the media strategy group at Frank N. Magid Associates. "We are in a phase of heavy, but cautious experimentation because the economics have not been there to support significant upfront investment. People are trying things, but they are trying not to be over-committed because they don’t know if it is going to be economically viable."

To get a handle on that experimentation, TVNewsCheck surveyed as many diginets as it could find (23 as it turned out) to see what kind of programming they offer, what their basic proposition to potential affiliates is and how far along they are in distribution (see capsules below).

A note on distribution: In this story and the adjacent chart, each network is credited for the aggregate over-the-air coverage of all its affiliates. Cable and satellite carriage (or the lack of it) does not figure into the percentages.

In an earlier story, TVNewsCheck explored how some stations in markets with a shortage of full-power stations were using subchannels to broadcast CW, MNT or even the Big Four networks.That trend is not a part of this report.

Nor is the use of subchannels for local programming, typically news and sports. NBC Owned Television Stations is leading the charge on this front with its news and lifestyle channels. It's now committed to launching nine Nonstop channels, including one that will cover three markets in California (San Diego, Los Angeles and San Francisco).

With the exception Ion Media, the diginets are actively looking for affiliates to extend their reach to as many of the nation's 116 million TV homes as possible. The enticement in nearly every case is a share of advertising inventory.

If diginets are experiments, there are plenty of experimenters. The TVNewsCheck survey found that virtually every major TV station groups is airing diginets or multicast channels of one kind or another.

Among the majors, only CBS and Fox have yet to take the plunge. And in the case of CBS, that may soon change. It's expected to announce soon some kind of play.

Clearly, the strongest of the English-language diginets at this point is This TV, the joint venture of MGM Entertainment and Chicago-based Weigel Broadcasting. Launched in 2008, This TV reaches 85.6% of U.S. TV homes with top MGM movies and classic TV shows.

The old independent formula still works, says John Bryan, president of MGM Domestic Television Distribution, which distributes the network. “On many nights, we’ve beaten a lot of the basic cable networks,” he says.

What nights? May 4, for one, says Bryan. On that day in primetime, he says, This TV posted bigger numbers than SOAPnet, Hallmark Channel, VH1, E!, WGN, We, TV Guide and ESPN2, among others.

Other diginets using some variation of the formula include Me-TV, Antenna TV and Retro Television Network (RTV).

Me-TV, owned by Weigel and based on one of its Chicago independents, rolled out nationally last December and already reaches around 40% of homes. MGM helps to find affiliates for the service.

"We are just six months old at this point and are optimistic that profitability will follow,"  says Neal Sabin, president of content and networks for Weigel, noting that the network is attracting national advertisers like AARP, Allstate, United Health Care and St. Jude Hospital.

Luken Communications’ Retro Television Network (RTV) is in 66% of TV homes. And Tribune Broadcasting’s Antenna TV, which debuted in Jaunary, already covers 51% of  the country.

On the English-language side of the diginet world, a string of niche networks is also looking for affiliates. They include TheCoolTV (music), The Country Network (music), Live Well (lifestyle), PBJ (children), Universal Sports, Untamed Sports and Bounce TV (ethnic).