AOL's new move: Cable TV music channel

The channel, which will likely be called "AOL Music," is expected to launch by the end of the year or early 2002, the sources said. The timing of the launch is planned to avoid other major events like the baseball World Series in October, though AOL is looking into buying a Super Bowl advertisement to promote the new channel.

AOL Time Warner (aol) did not return calls for comment.

The new music channel would likely be run by Jamie Kellner, chief executive of AOL Time Warner's Turner Broadcasting group, sources said. Earlier this month, AOL Time Warner merged its broadcast and cable networks under Kellner, the founder and chairman of the company's WB network.

At the time, AOL Time Warner co-COO Bob Pittman said the restructuring would give greater efficiencies to the company's cable networks, including CNN, TBS, TNT and the Cartoon Network, and allow for starting new channels. Pittman, of course, has a background with starting music channels, as he was one of the co-founders of MTV.

It is unclear whether the channel will be a new channel that will have to vie for space on already tight cable channel lineups--though a new AOL Music channel would likely have no problem getting space on Time Warner Cable, which serves 12.7 million customers.

Another scenario is that the channel would "piggyback," or begin as partial-day programming, on one of the Turner channels, such as TNT. This would become more likely if the company finds a buyer for World Class Wrestling, which was a staple of Turner programming before losing a ratings war with the World Wrestling Federation, according to one of the sources.

The music channel would fit in perfectly with AOL Time Warner's "multi-tiered promotional campaigns" it outlined during its "Investor Day" Jan. 31--the first public presentation of the newly merged company.

"TV does a great job of branding, print does a great job of branding and giving you more in the information phase; and online connects all three--gets your attention...click, tells you more about it...click, lets you buy it, tells you where to buy it, or gives you a qualified lead to someone who will call upon you," Pittman said in January. "Only one company has all of this, and can pull from all of these budgets."

The company would likely use the music channel to promote Warner Music artists, while using its AOL computer service to offer chats with the bands and downloads of the songs. The result, the company hopes, is that fans will watch the AOL Music channel for exclusive premieres of videos, then subscribe to AOL so they can chat with the band and have exclusive access to downloads, then go to the store to buy the CD.

"But the growth opportunity we're most excited about comes from our relationship with AOL Time Warner," Warner Music Group Chairman and CEO Roger Ames said at the Investor Day in January. "No other company can offer all the promotional and marketing opportunities that we can. The vast resources of this organization allow us to promote our artists on several different platforms, via soundtracks, movies, through magazines and on the broadcast and cable networks. And now to add to that we can also market and distribute our artists on AOL, as AOL develops its music strategy."

The convergence strategy has been hailed by analysts and is seen as the strength behind the merger. An AOL Music cable channel would just take it to another level.

Of course the merger hasn't been as smooth as the company would like it to appear. This week, Richard Bressler, who as Time Warner CFO and a close friend of AOL Time Warner CEO Gerald Levin was extremely instrumental in pushing for the merger, resigned from the company and is reportedly eyeing a position at rival Viacom. Bressler had been pushed down in the depth chart to an ops job post merger and had some confrontation with Case about three weeks ago.

Although the Turner networks skew to an older demographic, analysts point to the WB Network's audience as a foundation for AOL's move into the TV youth market.

"They have a starting point with the demos on the WB," says Tom Wolzien, media analyst with Sanford Bernstein of the 5-year-old broadcast network, which programs such teen-magnet shows as "Dawson's Creek" and "Popstars," the unscripted series focusing on the making of an all-girl musical group, Eden's Crush.

In particular, "Popstars" is seen as a cutting edge example of the AOL Time Warner music integration model. AOL has been promoting the WB network show and album--which will be released in May--to its millions of subscribers, including an exclusive chance to download the new single.

"When you watch [Popstars], you're basically looking at the foundation of something that could be spun out and provide some programming foundation on one of the existing Turner networks, or a new channel," says Wolzien.

Tough fight ahead
Despite the strong Time Warner music connection, a new music network is not a slam-dunk for AOL. Viacom's behemoth MTV Networks has a virtual lock on music programming, analysts note.

"Viacom currently roadblocks distribution of music through MTV, VH1 and CMT and all the radio stations they have in the top 50 markets," says Wolzien.

In addition, it's unclear whether the Turner network distribution contracts with cable operators would allow such a change in programming format.

"It's an issue of cable distribution," says Wolzien. "How do you get the cable distribution and if you're going straight, head-on after MTV, how big is the audience and how much ad revenue is there?"

Many have tried to take on the monolithic MTV to no avail. MTV, which celebrates its 20th birthday this year, reaches 340 million households in 139 countries.

In 1984 Turner Broadcasting briefly launched the Cable Music Channel, a rock-video network. The network failed to get cable distribution and died quickly.

Later the Video Jukebox Network, a pay-per-view music channel, struggled for years to get cable carriage before being acquired in 1998 by TCI Music, a subsidiary of cable operator TCI, which since has changed its name to Liberty Digital TCI Music. MTV Networks acquired the floundering channel from Liberty in 1999.

But it's obvious why AOL TW wants to tap into teen marketing mania. The 32 million Americans between 12 and 19 are expected to spend $155 billion this year, according to market research firm Teenage Research Unlimited.

AOL Time Warner plans to launch a cable TV music channel by the end of the year or early 2002 that would directly compete with MTV and VH1 while at the same time solidifying the media giant's plans to combine its music, broadcast and computer properties, sources familiar with the channel said.

The channel, which will likely be called "AOL Music," is expected to launch by the end of the year or early 2002, the sources said. The timing of the launch is planned to avoid other major events like the baseball World Series in October, though AOL is looking into buying a Super Bowl advertisement to promote the new channel.

AOL Time Warner (aol) did not return calls for comment.

The new music channel would likely be run by Jamie Kellner, chief executive of AOL Time Warner's Turner Broadcasting group, sources said. Earlier this month, AOL Time Warner merged its broadcast and cable networks under Kellner, the founder and chairman of the company's WB network.

At the time, AOL Time Warner co-COO Bob Pittman said the restructuring would give greater efficiencies to the company's cable networks, including CNN, TBS, TNT and the Cartoon Network, and allow for starting new channels. Pittman, of course, has a background with starting music channels, as he was one of the co-founders of MTV.

It is unclear whether the channel will be a new channel that will have to vie for space on already tight cable channel lineups--though a new AOL Music channel would likely have no problem getting space on Time Warner Cable, which serves 12.7 million customers.

Another scenario is that the channel would "piggyback," or begin as partial-day programming, on one of the Turner channels, such as TNT. This would become more likely if the company finds a buyer for World Class Wrestling, which was a staple of Turner programming before losing a ratings war with the World Wrestling Federation, according to one of the sources.

The music channel would fit in perfectly with AOL Time Warner's "multi-tiered promotional campaigns" it outlined during its "Investor Day" Jan. 31--the first public presentation of the newly merged company.

"TV does a great job of branding, print does a great job of branding and giving you more in the information phase; and online connects all three--gets your attention...click, tells you more about it...click, lets you buy it, tells you where to buy it, or gives you a qualified lead to someone who will call upon you," Pittman said in January. "Only one company has all of this, and can pull from all of these budgets."

The company would likely use the music channel to promote Warner Music artists, while using its AOL computer service to offer chats with the bands and downloads of the songs. The result, the company hopes, is that fans will watch the AOL Music channel for exclusive premieres of videos, then subscribe to AOL so they can chat with the band and have exclusive access to downloads, then go to the store to buy the CD.

"But the growth opportunity we're most excited about comes from our relationship with AOL Time Warner," Warner Music Group Chairman and CEO Roger Ames said at the Investor Day in January. "No other company can offer all the promotional and marketing opportunities that we can. The vast resources of this organization allow us to promote our artists on several different platforms, via soundtracks, movies, through magazines and on the broadcast and cable networks. And now to add to that we can also market and distribute our artists on AOL, as AOL develops its music strategy."

The convergence strategy has been hailed by analysts and is seen as the strength behind the merger. An AOL Music cable channel would just take it to another level.

Of course the merger hasn't been as smooth as the company would like it to appear. This week, Richard Bressler, who as Time Warner CFO and a close friend of AOL Time Warner CEO Gerald Levin was extremely instrumental in pushing for the merger, resigned from the company and is reportedly eyeing a position at rival Viacom. Bressler had been pushed down in the depth chart to an ops job post merger and had some confrontation with Case about three weeks ago.

Although the Turner networks skew to an older demographic, analysts point to the WB Network's audience as a foundation for AOL's move into the TV youth market.

"They have a starting point with the demos on the WB," says Tom Wolzien, media analyst with Sanford Bernstein of the 5-year-old broadcast network, which programs such teen-magnet shows as "Dawson's Creek" and "Popstars," the unscripted series focusing on the making of an all-girl musical group, Eden's Crush.

In particular, "Popstars" is seen as a cutting edge example of the AOL Time Warner music integration model. AOL has been promoting the WB network show and album--which will be released in May--to its millions of subscribers, including an exclusive chance to download the new single.

"When you watch [Popstars], you're basically looking at the foundation of something that could be spun out and provide some programming foundation on one of the existing Turner networks, or a new channel," says Wolzien.

Tough fight ahead
Despite the strong Time Warner music connection, a new music network is not a slam-dunk for AOL. Viacom's behemoth MTV Networks has a virtual lock on music programming, analysts note.

"Viacom currently roadblocks distribution of music through MTV, VH1 and CMT and all the radio stations they have in the top 50 markets," says Wolzien.

In addition, it's unclear whether the Turner network distribution contracts with cable operators would allow such a change in programming format.

"It's an issue of cable distribution," says Wolzien. "How do you get the cable distribution and if you're going straight, head-on after MTV, how big is the audience and how much ad revenue is there?"

Many have tried to take on the monolithic MTV to no avail. MTV, which celebrates its 20th birthday this year, reaches 340 million households in 139 countries.

In 1984 Turner Broadcasting briefly launched the Cable Music Channel, a rock-video network. The network failed to get cable distribution and died quickly.

Later the Video Jukebox Network, a pay-per-view music channel, struggled for years to get cable carriage before being acquired in 1998 by TCI Music, a subsidiary of cable operator TCI, which since has changed its name to Liberty Digital TCI Music. MTV Networks acquired the floundering channel from Liberty in 1999.

But it's obvious why AOL TW wants to tap into teen marketing mania. The 32 million Americans between 12 and 19 are expected to spend $155 billion this year, according to market research firm Teenage Research Unlimited.