Oxygen's fresh air
Cabler gets a boost from its bawdy shows
The fledgling women's cabler got a boost to the tune of 8 million additional subs -- the happy result of Lifetime's rate spat with Dish parent EchoStar. Oxygen chairwoman-CEO Geraldine Laybourne had been courting EchoStar's Charles Ergen for carriage on Dish Network since the cabler launched in 2000.
Now, with a potential breakout skein in "Campus Ladies" and 66.3 million homes, the pressure is on Laybourne to make Oxygen mean something in a landscape where femme fare like "Desperate Housewives" and "Grey's Anatomy" are sending women back to the broadcasters.
"We're able to invest more and still be more profitable at an earlier stage in our life cycle than our business plan contemplated," Laybourne says. Oxygen turned a profit in 2004. "This is transformative. It's not just the fact that we'll have more impressions and more ad revenue. It's the ripple effect."
With the backing of tech billionaire Paul Allen, Oxygen has always had money to spend on programming, but distribution was another matter. Laybourne made the call early on to hold out for analog distribution -- 90% of the net's subs are on a basic tier -- but since analog slots on cable and satellite systems are scarce, Oxygen worked with a smaller aud, which makes generating hits harder.
Now, thanks to Dish, Oxygen will have more eyeballs -- and a better chance at hits.
The most immediate impact will be a bump in ad revenue, which Kagan predicts will jump from $71.6 billion to $84 billion in 2006, thanks to the Dish deal.
But the influx of cash and, presumably, more viewers, doesn't change the fact the net has a ways to go. Last month, Oxygen drew an average 257,000 primetime viewers -- that's an increase of 4% from the previous year, but still light-years behind Lifetime's 1.55 million. Lifetime, of course, is in nearly 90 million homes, but even WE, with 55 million homes, grew 64% in January and nearly matched Oxygen, with 253,000 viewers.
The real competition for Oxygen is much broader; TLC, E! and VH1 program heavily toward women, as will the upcoming CW.
"Clearly there's room for Oxygen, but the (broadcast) networks themselves are 60% to two-thirds female, so this isn't their exclusive domain, and competition is high for this demo," says John Rash, director of broadcast negotiations at Campbell Mithun.
That's the biggest difference between Oxygen and Nickelodeon, which Laybourne founded and turned into a monster hit. With Nick, Laybourne targeted a kid market that was woefully underserved, but women, one could argue, are overserved in the current TV market, making compelling programming all the more critical to the strategy.
Which brings us back to "Campus Ladies." Right after the Dish deal, Laybourne renewed the bawdy improv comedy about some middle-aged housewives-turned-college students trying to ingratiate themselves with co-eds.
Exec producer Paul Young says Laybourne was high on the show from the get-go. "After she saw the first two episodes we produced, she called me up and told me she believed this was a hit show. She said, 'Even if the numbers aren't huge out of the gate, we're going to treat this like a hit.' "
Laybourne says the show proves that a serious network for women can, and should, have a sense of humor. But some see a similar trend line to Lifetime, a net started with lofty principles about empowering women that ended up gravitating toward salacious stories and off-net movies.
"They start out with high ideals and then they find out the market they are interested in isn't as supportive of advertising," says Harold Vogel, president of Vogel Capital Management. "It's inevitable -- they all morph into an all-purpose network."
"We're not a general entertainment," Laybourne argues. "We are creating a brand with humor and personality."
But if it makes money, and women are watching, does that really matter? Especially if you're Paul Allen, a private equity investor, or one of the cable operators that got a piece of Oxygen in exchange for carriage.
And now even Ergen, one of the most competitive and tightfisted execs in media, has a stake in Laybourne's success. But she's got what Ergen's after: another round of "Campus Ladies" and, this summer, a new reality show about modeling from former "America's Next Top Model" judge Janice Dickison.
"Charlie likes originals. That's one of his big things ... and we've had many conversations about it over many years," she says with a laugh.
