Cable networks shine with stars, Conan, Oprah

* Moves by Conan O’Brien, Oprah highlight cable popularity

* Cable networks gain by targeting narrow viewer groups

* Dual revenue streams help boost company profits

By Jennifer Saba

NEW YORK, Nov 12 (BestGrowthStock) – Once considered the backwater
of television, cable networks have in recent years become the
brightest stars in the media business, bringing their owners
outsized profits and attracting some of today’s biggest names
in showbiz.

The latest migration: Conan O’Brien took his talk show
style and young audience from NBC to TBS. Next up, Oprah
Winfrey launches an entire cable network, OWN, in 2011.

The three hottest entertainment companies on Wall Street
are Discovery Communications (DISCA.O: ), Scripps Networks
Interactive (SNI.N: ) and Viacom Inc. (VIAb.N: ). Their stock
prices are all up 25 percent or more this year.

Not one of them owns a broadcast network; rather they’re
home to cable channels such as the Food Network, Animal Planet,
Travel Channel, and Comedy Central.

But with cable’s expansion come challenges that include
differentiating networks in a multi-channel universe and, as
with the broadcast networks, keeping youthful audiences
tuned-in amid a number of entertainment options from movies to
videogames, social networking and others.

“What we are doing is trying to find audiences who are
passionate,” said Peter Liguori, chief operating officer of
Discovery Communications (DISCA.O: ), which will partner with
Winfrey in the OWN network.

OWN, the Oprah Winfrey Network will include a mix of shows
offering entertainment and information as well as a
reality-based series, “Your Own Show: Oprah’s Search for the
Next TV Star”.

There is no doubt about cable’s success in the past decade
as shows such as HBO’s “The Sopranos” or AMC’s “Mad Men” won
over critics and fans, and specialty networks like all-sports
channel ESPN became juggernauts for profits.

According to media research firm SNL Kagan, Walt Disney’s
ESPN cable networks which earned $1.5 billion in cash flow in
2009, compared with CBS television network, which earned $228
million in cash flow last year.

Ten years ago, broadcast captured 48 percent of prime-time
viewing households while cable had a 43 percent share,
according to Nielsen Media Research. Now cable networks command
60 percent of audience homes, versus the networks’ 36 percent.

One big reason is that cable networks cater to narrow
groups of fervent viewers who become attached to shows they
love, and that strategy means consistent audiences in a
fragmented market.

Broadcasters, by contrast, are built to attract mass
audiences and often must tailor content for broad appeal,
pleasing fewer viewers in the process.

O’Brien’s move to Time Warner Inc’s (TWX.N: )TBS network
serves as a good example. TBS snagged O’Brien from General
Electric-owned (GE.N: ) NBC after the broadcaster made a
disastrous reshuffle of its late-night lineup earlier this
year.

After O’Brien became host of NBC’s “The Tonight Show,” the
network was unable to attract the audiences that advertisers
and its network affiliates needed. But TBS is looking for
exactly the sort of youthful, offbeat comedy-loving audience
that O’Brien, 47, brings with his new show, “Conan.”

“My parents are going to watch and I’m thrilled about that,
but they don’t count in this business. The game is all about
youthful demographics and we expect Conan to be extremely
competitive,” Steve Koonin, president of Turner Entertainment
Networks, which includes TBS.

Similarly, Oprah Winfrey, whose chat show has long been
among the top-rated programs on daytime TV, can leverage her
fan base to launch the lifestyle-oriented network, OWN.

And at the moment, cable networks have the money to spend
on stars thanks to twin revenue streams of advertising and fees
paid by pay TV services.

Moreover, that business model also gives cable programs
more time to blossom than those on broadcast TV, where there is
far more pressure to immediately please advertisers.

On cable, “you are not going to get canceled in the middle
of the year like on network TV because of low ratings,” said
Brad Adgate senior vice president of research at Horizon Media.

Still, because of their big audiences, broadcasters retain
the upper hand in pricing TV advertisements, which tend to
command roughly 30 percent more than cable TV commercial spots.
But in recent years, the ad playing field has been considerably
leveled, advertising executives said.

“Those days of getting a (huge) rating on one show are few
and far between,” said Donna Speciale, an advertising executive
with agency MediaVest, whose clients include Coca-Cola (KO.N: )
and Wal-Mart Stores Inc. (WMT.N: ). “You now need a lot of little
wins as opposed to big wins.”
(Reporting by Jennifer Saba; editing by Paul Thomasch and
Carol Bishopric)

Cable networks shine with stars, Conan, Oprah