Keeping Fuel TV’s energy level up

It’s nice to be wanted, especially when you almost weren’t.

Last year, Rupert Murdoch’s media leviathan News Corp. tried to unload its guppy-scale cable channel Fuel TV, which operates out of a hulking office building in West Los Angeles within earshot of the 405 Freeway. But after months of back-and-forth with the would-be buyer, MTV Networks parent Viacom Inc., News Corp.’s Fox executives decided to keep Fuel TV.

The 7-year-old TV channel is available in only about 30 million homes, a little more than a quarter of all U.S. households with cable or satellite TV. That’s a small footprint, but lately Fuel TV — which targets boys and young men and focuses on the action sports of skateboarding, snowboarding, surfing, BMX biking, motocross and wakeboarding — has been finding its own mojo.

Fuel TV has a modest and eclectic programming lineup, which includes musical acts, the nightly talk show “The Daily Habit,” and its signature show, “Firsthand,” which explores the lives of young action sports athletes. Fuel TV’s digital applications have been popular.

“We have 4 million downloads a month from the iTunes store,” C.J. Olivares, Fuel’s general manager, said Wednesday during an interview in his office, which sports a collection of surfboards, skateboards, guitars and a Batman mask.

According to media consulting firm SNL Kagan, Fuel’s revenues have increased at least 20% nearly every year since its launch, and it should rake in $71.4 million in 2010. SNL Kagan estimates the channel’s cash flow at $20 million, amounting to a nearly 30% margin.

Olivares, who grew up in Orange County and lives in Manhattan Beach with his wife and three daughters, is the architect of Fuel TV. When Olivares showed up for work in July 2002, no one seemed to be expecting him. He had no office and no desk. Soon, a janitor began clearing out TV show tapes and DVDs from a storage closet, which became Olivares’ office for a month. These days, he is feeling more at home.

Last year, your corporate parent, Fox, tried to sell Fuel. That must have been disconcerting.

Yeah. Being good, smart businesspeople, when someone approaches and asks if you are interested in selling, the standard response is, “For the right price, everything is for sale.” But at the end of the day, News Corp. and Fox felt that there was more to be gained by keeping it than simply taking a reduced price on the value of the business. For the last seven months, we have been exploring pathways to expand the business, which includes domestically and internationally, and forming partnerships.

What are your challenges to grow Fuel TV?

On the domestic front, the challenge is the competitive landscape of cable television. There are so many channels lobbying, negotiating and fighting for distribution. Cable operators are trying to figure out how to best package those channels. We feel that we have established a great foothold in the 12-to-24 male audience through this filter, or lens, of action sports.

But that doesn’t completely define us because we are also a lifestyle, sports and entertainment network that appeals to this demographic. It includes action sports but also music and comedy. One of the big shifts for us is to continue to expand our program offering to be more inclusive without alienating the audience that we have today. Our awareness and viewing among the core participants of skateboarding, surfing, snowboarders, is solid. Now we want to get the kid who is a little less active as a participant but loves the sports.

You cover sports but mixed in there are messages of environmentalism and activism. How did that develop?

Yes, there is social activism, not just environmental, but humanitarian as well. It’s that whole category of social responsibility. From the time we launched, we were seeing companies at the brand level — the Billabongs and Quiksilvers — taking the initiative by setting up foundations and making contributions to environmental and humanitarian causes. We also saw that social responsibility was very important to the 12- to 24-year-old demographic that we were trying to attract.

Two things have happened since we launched the network. One was “An Inconvenient Truth” [ documentary] that raised awareness about global warming, and there were also several devastating humanitarian catastrophes in Indonesia, which is particularly important to surfing. And now you have got this oil spill in the Gulf of Mexico, which will have devastating, multi-decade effects on the environment.

You are part of the News Corp. family, and most people identify News Corp. with Rupert Murdoch and Fox News. How does that square with the channel’s progressive philosophy?

Look at a lot of the channels here, and they are not all Fox News- or Fox Business-oriented. Fox Broadcasting and the FX channel take creative risks. They are both known for being on the leading edge of prime-time programming. They are not necessarily “politically conservative” channels. When you get into the entertainment and sports channels, they tend to be a little less so. It is a very big, diverse company, and there is opportunity for channels to have their own unique voice.

How have you been able to grow your revenues when the channel is not widely distributed?

The ad sales side has done well. When you look at the last two fiscal years, we fared better than some of the bigger, broader networks, and that has to do with having this highly desirable audience. They may not be buying big-ticket things like cars, but they are still consuming entertainment of all forms, from theatrical movies, DVDs to video games and electronics and snack foods and drinks. We have Scion, the car label, and Geico car insurance. Boys driving cars still need car insurance.

meg.james@latimes.com