Sound and the Furry : Fledgling Pet Cable Channel Faces Uphill Battle

When Viacom launched TV Land in April 1996, it pulled out all the stops for the new cable channel. The company decorated the Paramount Pictures lot and served wine, shrimp and roast beef to thousands of celebrants. A-list stars of nostalgia TV, including Barbara Eden, Eddie Albert and Rose Marie, were on hand.

The launch of My Pet Television Network last month was somewhat more modest. A small dog dressed as Elvis turned a few heads among the couple of hundred guests who came and went at the video production house down the street from Los Angeles International Airport, where the fledgling channel tapes some of its programming. Sometime-”Friends” guest star Lauren Tom showed up with her two dogs. There were finger sandwiches and fruit, but it wasn’t exactly swank.

Launching a cable channel today is tough. It’s a buyer’s market for cable providers, with few available slots and dozens of suitors.

Entertainment conglomerates such as News Corp. and Viacom can throw $5 to $10 per subscriber in “marketing support” to cable operators to carry a Fox News Channel or a TV Land. For those companies, the entry fee to launch a cable channel runs into the hundreds of millions. Even then it’s not easy; those two channels have had a battle getting into a majority of the 70 million cable homes.

Then there’s My Pet TV, whose backers (all private investors) hope to build a 24-hour pet channel. Total investment so far: just more than $500,000.

Through the end of August, My Pet is providing cable operators in 11 U.S. markets (including Atlanta, San Francisco and San Diego) one hour of free programming. The object: to prove there’s an eager audience for pet programming.

The city with the largest number of subscribers receiving an hour of My Pet TV every day is Los Angeles: 4.5 million households in certain areas covered by Comcast, Time Warner and Media One are receiving the programming during morning hours.

My Pet’s chairman, president and chief executive is 53-year-old cable veteran Michael Marcovsky. While at Warner Communications (later Time Warner) in the 1970s, he helped launch the QUBE interactive TV experiment in Columbus, Ohio.

“I was the guy that hired Flippo the Clown [Columbus’ cut-rate Bozo] to fly in on a helicopter for the launch party,” he jokes.

Besides avoiding extravagances as helicopters, Marcovsky has other ways of keeping costs down at My Pet. First, there’s the modest cost of the programming itself: shows like “Hollywood’s Rich and Furry” (featuring pets of such luminaries as Mr. Blackwell and “Night Court’s” Richard Moll) and “Two Tails Up” (a program showcasing animal movies). These programs are low-budget and look it.

Marcovsky says low cost is one of the advantages of pet programming.

“There’s not a golden retriever in the world that says I have to pay his copyright fee,” he says.

Another way to keep costs down is by carrying “sponsored programming”--also known as infomercials. My Pet’s “Petsville USA” is a shopping program for pet products, with a cut of the sales revenue going to the cable channel.

That there is a market for pet-related products and information is clear: Americans spend an estimated $20 billion-plus annually on pet food, care and supplies. More than 50% of U.S. households have at least one dog or cat. That translates into 106 million dogs and cats, not to mention an estimated 13 million birds and 6.6 million horses.

Even so, My Pet appears to be facing an almost impossible task, say executives at major cable networks who have recently launched channels.

“The major niches are gone, as well as the interesting sub-niches,” says Mark Rosenthal, president and chief operating officer of Viacom’s MTV Networks. “Not only do you need deep pockets, but you need the infrastructure already in place to launch a new network. . . . You need to be able to build on the license fees and ad sales of an existing network.”

My Pet has a couple of complementary businesses to build on, but whether they’ll be enough to drive a cable network is open to question. For the last few years, the company has produced 90-minute tape loops shown in 7,500 veterinarian offices and half-hour videos produced for 300 animal shelters around the country, for giveaway to people adopting pets.

Private investors (including several veterinarians) have so far put about $2 million into the proposed 24-hour channel, according to Marcovsky.

In the cable world, that’s kibble.

“Even if there were some channel capacity and people thought that the brand was strong, I mean, $2 million . . . “ says Dan Davids, executive vice president and general manager of the History Channel. The History Channel was spun off from A&E; Television in 1995.

Continues Davids: “The Home and Garden Network and a couple of others were offering $5 a subscriber [to cable operators]; Fox News was reportedly offering $10 to $15. How can you compete?”

Marcovsky recognizes that the obstacles are considerable. But he has some creative ideas about how to get more bang for his buck. He has an agreement with the Humane Society of the United States to consult on and, he hopes, help promote his programming to its 4 million-plus dues-paying members.

He also has access to those 7,500 veterinarian offices and 300 pet shelters he’s been providing videotapes to. There, My Pet can distribute leaflets and offer sampling to My Pet advertisers. Sponsors of My Pet’s test include Samsonite (for a line of pet carriers), Hill’s Science Diet pet food and Francodex’s Tick Arrest. Advertisers are carefully screened for their animal-friendliness; no animal testers are allowed.

Marcovsky knows that the channel’s mandate to be ultra-sensitive to animal welfare could be limiting.

“We want to be advertiser-supported but not advertiser-dependent,” Marcovsky says. He adds that if the channel shows old TV series like “Lassie” or “The Adventures of Rin Tin Tin,” the host would point out things that today’s pet owners shouldn’t do, such as let their dog ride in the back of a pickup truck or run free without a tag or collar.

Channel capacity remains the primary hindrance for new channels. The average cable customer gets only 45 channels, a far cry from talk a few years ago that the “500-channel universe” was upon us.

Marcovsky’s aim in testing My Pet is to convince cable operators that people will like it. But even if operators agree with him, they say they’re often strong-armed into taking extra channels offered by giants such as Walt Disney and Time Warner, rather than being able to pick and choose among new offerings.

Marcovsky hopes the introduction of digital broadcast expected in fall 1998 will present an opportunity for My Pet. The Federal Communications Commission has mandated that broadcasters in the U.S.’ top 10 markets start broadcasting digital signals by the end of 1998.

They can do that by broadcasting one, highest-quality HDTV channel, or by splitting the spectrum to show several standard-quality channels. Some firms have indicated they favor the latter because it could bring a broadcaster more revenue from ads and subscriptions than would broadcasting a single HDTV channel.

The problem, of course, remains that My Pet will be vying against existing channels with more clout. The HBOs and Showtimes may well seek homes on that additional space. And cable operators and broadcasters with new channel real estate aren’t likely to pay the same kind of license fees they do to today’s cable channels. License fees typically represent as much as 40% of a cable channel’s revenue.

Marcovsky, meanwhile, is talking about getting carried on UHF stations in such markets as Boston and Philadelphia. He also thinks his programming might be compelling enough to cut a deal with a satellite broadcaster who could, for example, promote its service by installing dishes at veterinarian clinics.

In short, My Pet’s business model is still in flux. Marcovsky says he’s exploring the idea of giving a trading equity in My Pet in exchange for gaining distribution.

Still, he remains optimistic.

“We are a niche channel, but we have a very broad base,” Marcovsky says. “Look at something like the Sci-Fi Channel. Not half of all the households are ‘Star Trek’ fans.”

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Pet Spending

In the last 10 years, Americans’ spending on pet food and supplies has doubled. Not surprisingly, that coincides with increased ad spending by the pet-care industry.

Spending on pet food/supplies (in billions)

1997*: $10

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TV ad spending on pet products (in millions)

2002*: $167

* Estimates

Sources: Census Bureau (1987 and 1992 data on pet food and supplies); Paul Kagan Associates for My Pet TV