David Pullan, the new UK vice-president of marketing and communications for MTV and VH1, faces a daunting task – managing a leading brand in a fragmented market, while launching several brand extensions of his own.
MTV, which first launched music television in Europe in 1987, lost its position in the UK as the most watched music channel two years ago.
According to Independent Television Commission (ITC) figures for the first quarter of this year The Box has an audience of 2.1 million compared with MTV’s 2.06 million. The leader, however, is MTV’s adult oriented sister brand VH1, with 2.2 million viewers. Other players in the UK sector, such as the BBC Flextech joint venture comedy and music channel UK Play, have made strong market entries.
Some buyers say that unless MTV falls significantly behind its rivals, raw numbers are not essential because the brand, which attracts a large 16- to 24-year-old group, is so strong that advertisers are prepared to pay a premium for it.
Pullan disagrees: “It’s all about numbers. And our audience does not reflect the quality of the product.”
He wants MTV to climb above The Box, and would like to see this happen in the next nine months.
Pullan has spent the past six months as a senior advisor in the BBC’s Corporate Strategy unit. Before that he worked for five years as marketing director for record label BMG Entertainment. He now reports to the managing director of MTV Networks UK Michiel Bakker.
The UK is Europe’s most competitive music television market, but MTV faces challengers across the continent – in France and Belgium from the Music Factory, in Italy from Video Music, and in Europe’s biggest market Germany it has Viva to struggle against.
MTV has adopted a three-pronged strategy in the face of this competition during the past three years.
First, under pressure from advertisers, it largely dismantled its pan-European network and split its feed into five services: the UK and Ireland, southern (Italy), central (Germany, Austria, etc), Nordic (Scandinavia), and European (France, Spain and parts of Eastern Europe). This let in a host of businesses which simply wanted to advertise in national markets.
The second move was equally lucrative. Until 1996 MTV had given its signal free to networks which wanted to carry its service. However, the channel announced that it would encrypt its signal and carriers that wanted to take its programming would have to pay.
The third MTV move begins on July 1. The channel will launch three new extensions on SkyDigital. MTV Extra will play independent rock, MTV Base playing soul and hip hop, and VH1 Classics playing pop and rock from the late Seventies and early Eighties. The network already broadcasts M2, an Internet music channel, which was launched last August.
The power of the MTV brand enabled these changes. As a senior European TV buyer puts it: “In pan-European TV CNN and MTV are the only brands that matter. And in terms of youth culture MTV is one of the biggest brands in the world. Advertisers will pay for that environment.”
Viacom, the US media conglomerate that owns MTV as well as Paramount studios and Blockbuster video stores, regards the channel highly.
One former UK-based Viacom executive says: “Studios always have an element of famine or feast built into them. Blockbuster has a lot of restructuring problems because of the trend in mature markets which is bringing entertainment direct to homes through cable and digital TV. But MTV delivers stable profits.”
Viacom’s third quarter profits delivered last November dropped 86m – or 68 per cent – to 271m compared with 1997. However, within these figures Viacom’s broadcasting unit, of which MTV and VH1 are the major part, rose 11 per cent year on year to 166m.
Pullan must ensure that in an expanding market MTV does not become a commodity. The power of its brand underwrites its advertising premium. However, maintaining this state of affairs takes investment.
Pullan is aware of this, and does not rule out an advertising campaign. He says: “MTV and VH1 are powerful brands. But MTV has gone off the map a bit. There have been many changes at the channel recently and we have to tell people about them. There is a perception that we are a rock and Euro pop channel. We need to do more than on-air promotions.”
The Box audience has picked up by playing a mixture of black and pop music through its request structure. MTV has responded over the past 18 months by playing more pop music, launching a request slot of its own, and developing MTV Base.
Other music channels are fighting to stand out in an increasingly crowded market. It is understood the reason why former joint managing directors Vince Monsey and Liz Laskowski were replaced at The Box by Stuart Pinches, a former VH1 senior director, this year because its new owners EMAP wanted management with more marketing nous.
Music channels are one of the oldest forms of pay TV and have moved on from being a commodity. MTV will have to invest in the suite of six channels it will run across Europe. The alternative is a host of smaller channels spread across the continent that will steadily erode its share, ballad by ballad.