Channel One: New owner, old issues
By Mya Frazier
Advertising
Age
November 26, 2007
Channel One’s got a new CEO, a new head of sales (from
World Wresting Entertainment, no less), and a content
deal with NBC that deals with the messy and costly
detail of news production. Amid the many inevitable
changes since Alloy Media & Marketing bought the
in-school network from Primedia for $10 million about
five months ago, a few things have stayed the same.
It still forces teachers to perform the chore of feeding
tapes into outdated VCRs to record the show via a
satellite dump, at least until a planned $12 million
digital upgrade is completed in April 2008. And, yes,
Channel One is still a target for those groups that
believe schools should be commercial-free, even though
its audience has shrunk and it no longer accepts ads for
non-nutritional food such as candy, soda and snacks.
The network that once boasted of reaching 10 million
teens in 320,000 classrooms and at its high point in
2002 brought in $50.2 million in ad revenues is not
offering the kind of audience it used to: only 6 million
teens, according to a PowerPoint presentation provided
by Channel One, and only 270,000 classrooms. Despite the
shrinking audience, executives claim it offers the
equivalent of a 17.3 Nielsen Media Research rating. With
junk-food, fast-food and soda advertisers out for good,
Channel One is stuck courting a smaller pool of
advertisers.
Optimism up top
In a recent call with analysts, CEO Matt Diamond said he
was “bullish” as the network went into the second half
of 2007 and 2008. “Based on what we’ve booked for next
year already in new advertisers, incremental spots we
were able to close for the end of 2007 and expected
renewals, 2008 is pacing 30% to 50% ahead of 2007.”
Alloy is mum on ad revenue to investors. Unlike when the
network was owned by Primedia, Alloy does not break out
ad revenue in SEC filings.
Marketers identified by Channel One as appearing on its
program include New Line Cinema, Warner Home Video, Sony
Pictures, U.S. Marine Corps., U.S. Navy, U.S. Army, the
Knight Foundation, Warner Brothers Studios, and
video-game marketers Nexon and Activision.
Except for a smattering of Neutrogena commercials with
perky teenage girls for a line of acne medications, the
only ads on view the day Ad Age checked out
channelonenetwork.com were for websites such as Find
Tuition and Careers and Colleges, both owned and
operated by Alloy. The two-minute commercial segment was
heavy with PSA’s, from wildfire-prevention ads to
appeals from President Clinton ("When I was in school, I
was overweight. I ate foods that were high in fat and
didn’t exercise...") rather than ads from corporate
America’s biggest brands. The CW network was promoting a
single show.
“Branded” news
Despite Channel One’s long-standing policy of limiting
advertising to two minutes out of 12 minutes of
programming, “branded” news segments are popping up. The
Army sponsors a question of the week. Gatorade sponsors
a player of the week.
“We don’t consider a sponsorship ad, brought to you by,
to be an expansion of advertising at all,” said CEO Kent
Haehl, who joined Channel One in late October, after
working as exec VP of In-Store Broadcasting Network.
Mr. Diamond said the digital rollout will give Channel
One more data to share with advertisers, including an
answer to the longstanding criticism that the TVs are
never turned on: It will finally report whether the sets
were actually on or not. “We didn’t have that kind of
data before,” he said.
To woo more advertisers, Channel One has beefed up its
sales staff to six and plans to add a head of sales,
Andrew Knopf, from World Wrestling Entertainment,
according to Mr. Haehl.
Racy relations
One of the biggest challenges facing Channel One could
stem from its position within Alloy. Indeed, Channel One
could emerge as even more controversial due to its
connection to Alloy, particularly given the company’s
association with the books that inspired the sex-infused
“Gossip Girl,” now airing on the CW, and
social-networking sites such as Sugar Loot, where
scantily clad teens often post photos to be voted as
“hottest girl” or “hottest guy.”
“Alloy has been operating under the radar since being
founded in 1996. ... Alloy recklessly publishes trash
novels like ‘Gossip Girl’ for teens and preteens,” said
Jim Metrock of Obligation Inc. on his website. “These
novels promote underage drinking, celebrate illegal drug
use and normalizes casual sex. ... This is Alloy’s sick
world for kids.”
A retired businessman who worked in the steel-wire
business in Alabama, Mr. Metrock has spent the past 12
years self-funding a campaign against Channel One. “It’s
robbing from our children’s education,” he said, adding
he estimates an hour of lost instructional time a week.
Mr. Haehl, via e-mail, said of Mr. Metrock, “We choose
not to respond to inaccurate, dated commentary on
Channel One News.”
Ready for a fight
While Campaign for a Commercial-Free Childhood never
campaigned against Channel One when it was owned by
Primedia, it recently has been spurred to action after
researching Alloy’s other youth-based programs and
marketing work.
“Alloy is not a company that has any business being in
schools, and we plan on making the point shortly,” said
Josh Golin, associate director at the
anti-commercialization group. Mr. Haehl, in response,
points to the network’s many awards, including a 2005
Peabody Award. “There are people who tend to look at
Channel One and see only the advertising. But we give a
product back every single day. We give a news product,”
Mr. Haehl said. “It has to be supported by advertising.
And that’s an important distinction that some refuse to
see.”
Clearly, the historic controversy surrounding Channel
One isn’t going away anytime soon, even though, for
media buyers, accountability remains a concern.
Stuck in their seats
Brad Adgate, research director at New York-based media
firm Horizon Media, called for more measurement of
Channel One advertising. Even so, he said the network
does offer what’s increasingly a rare find. “It goes
after an audience that is not easy to reach. Teens
multi-media task; they consume eight hours of media a
day in six hours. Maybe that’s part of the appeal for
advertisers is you have a little more of a captive
audience. If you get them brand loyal early, you will
have them for the next 60 to 70 years.”
Rick Haskins, CW’s exec VP-marketing and brand strategy,
is one of those advertisers. He began advertising the CW
reality show “Life is Wild,” about an American family
that moves to Africa, on Channel One.
“Channel One had gotten into a rut and somewhat of a
formula,” he said. “Alloy ... already is shaking it up.
They are really making the programming more meaningful
for the kids, and that will make it more meaningful for
the advertisers.”