MTV Networks, Inc.

founded: 1984

Contact Information:

headquarters: 1515 broadway
new york, ny 10036 phone: (212)258-8000 url: http://www.mtv.com

OVERVIEW

MTV Networks, Inc. (MTVN) includes MTV: Music Television in the United States, Europe, and Latin America; Nickelodeon in the United States, Europe, Asia, and Latin America; Nick at Nite in the United States; VH1 in the United States, United Kingdom, and Germany; MTV2: Music Television in the United States and Europe; and TV Land in the United States. MTV targets viewers from the ages of 12 to 34 with programming that includes music videos, comedy, animated programs, news specials, interviews, documentaries, and other youth-oriented programming. MTV2: Music Television, a 24-hour, seven-days-a-week spinoff of MTV, targets a segment of the 12 to 34-year-old audience with music videos that cover a variety of musical genres. MTVN also includes "The Suite from MTV Networks," a package of digital television program services, which currently consists of six music program services.

Individual network survival often depends on staying current with trends. Nickelodeon, for instance, has been successful with innovative programming for children of all ages. In 1998 MTV decided to overhaul its programming. Management's concern was that the company had become too corporate, interested more in profit than its original design of music programming; that it was alienating the target audience with increasing levels of non-music programming, which had originally been designed to raise ratings. Due to this evaluation, MTV decided to cut back on its non-music programming and scheduled a return to more music and music/news.

COMPANY FINANCES

MTV's profits steadily increased throughout the 1990s at a rate of approximately 25 percent per year. Its cash flow margin was 40 percent in 1995 and 41 percent in both 1996 and 1997, which is considered a high percentage in the industry. While about one third of MTV's revenue comes from cable subscription fees, advertisers will pay high rates to get the 12- to 34-year-old audience despite low Nielsen ratings. The rates for advertising on MTV have grown an average of 10 percent per year.

In 2000, MTVN reported sales of $3.895 million, reflecting growth of 73.1 percent. In 2001, MTVN had revenues of $2.25 billion and operating income of $816.9 million, reflecting respective increases of 21 and 24 percent. The increase in revenues was due to higher worldwide advertising revenues, higher affiliate fees, and the success of MTVN's consumer products licensing programs. The previous year, MTVN had revenues of $1.9 billion and operating income of $660.1 million.

ANALYSTS' OPINIONS

Observers have noted a huge irony about MTV: It is a network for 20-year-olds run by people in their 40s and 50s. Proponents of educational or moral improvement have blamed MTV for the intellectual or spiritual "dumbing down" of America. A criticism leveled at MTV since its inception, it reached a crescendo in 2001, thanks to MTV's bizarre show "Jackass," which involved a group of guys who enjoyed videotaping each other as they performed ridiculous and often quite dangerous stunts. That year, a teenager was badly burned when he tried to imitate a stunt he saw on the show. He had his friends pour gasoline on him and then set him on fire. During the ensuing outcry, Senator Joseph Leiberman, Al Gore's vice presidential candidate the previous year, asked Viacom to implement some programming changes. By 2002, "Jackass" was off the air.

HISTORY

MTV was the creation of a small group of people who sought to take advantage of the new industry in rock videos. It began with a $15-million investment from Warner Amex Satellite Entertainment. The debut video of the network in August of 1981 was Video Killed the Radio Star, by the Buggles.

In 1984, the year MTV held its first Video Music Awards, MTV and children's network Nickelodeon, established in 1979, were brought together as MTV Networks. On the first day of 1985, with the establishment of VH1, a 24-hour video network appealing to an older audience, MTV Networks had an audience that ranged in age from preschool to the late 40s. Meanwhile, Warner put MTV Networks up for sale in order to raise cash. In September 1985, it was purchased by entertainment conglomerate Viacom International. The next year, Viacom itself was bought by National Amusements, Inc., largely owned by multi-millionaire investor Sumner Redstone.

Under its new ownership, Nickelodeon went from last place among basic cable channels to first place. The network adopted some of the same graphic-intensive qualities of MTV, which proved to be successful. The flagship network, however, entered a slump in the late 1980s, as the novelty of the video craze wore off. The network moved away from videos and toward game shows to stem this decline. It began with the launch of Remote Control in December 1987. News and other types of programming, such as the acoustic concert series called MTV Unplugged, were introduced in 1990.

During the 1990s, MTV became heavily involved with politics, starting with the "Rock the Vote" campaign, and continuing with the "Choose or Lose" election coverage in 1992. Also in 1992, MTV premiered the popular show The Real World. In 1993, Beavis and Butt-Head was introduced. MTV established a strong presence in cyberspace with the launch of MTV Online, in cooperation with America Online, in 1994. In 1996, MTV created a sister channel, MTV2: Music Television.

Also in 1996, MTV Productions in association with Paramount Pictures released the feature film Beavis and Butt-Head Do America. Following that initial success, MTV and Paramount Pictures have produced a successful string of films aimed at the MTV demographic that includes Varsity Blues and The Wood.

In July 1999, MTV formed its Original Movies for Television Division and its first film, 2gether, which first aired in February, 2000, garnered high ratings. Also in 1999, MTV introduced a line of home videos, consumer products and books, all featuring MTV programming and personalities.

STRATEGY

MTV's strategic focus has been its awareness of its core audience's preferences and tastes. MTV and its networks spin off products in order to hold the attention of their focus age group. Movies, new networks, and merchandise keep the brand name in front of consumers. As far as MTV itself, videos are not the product; MTV is the product. By the late 1990s, MTV was working to define itself and to keep viewers. With 50 to 100 cable channels available to the average household, competition was fierce. Videos, too, were available to any network. MTV had to be unique to hold on to a respectable market share.

MTV goes beyond the usual focus groups to stay on the cutting edge. The network sends researchers into the field to go through the closets, rooms, and CD collections of young adults, looking at anything that could provide a clue to their tastes. The age range chosen was 18 to 24 because younger teens want to be seen as older and older adults want to be seen as younger.

The Networks' Nickelodeon channel opened an animation studio in California in early 1998, the first in Los Angeles in 35 years. This was expected to allow Nick-elodeon more flexibility in programming. The network also started a comic strip based on the Rugrats show in 1998, continuing the strategy of spinning off brands.

Overall, MTV Networks, Inc. commands an impressive spectrum of age groups. Rounding out MTV's demographic on each side are Nickelodeon, which was originally geared toward the under-16 age group, and VH1, which appeals to viewers 18 to 49 years old. Nick at Nite and Nick at Nite's TV Land, with their nostalgic offerings of television shows from the 1950s into the 1980s, further solidified MTV Networks' hold on the older age group.

As would be expected, a "cutting edge" organization such as MTVN rode on the wave of the information and communication technologies revolution in the late 1990s. In 1998, the company launched "The Suite from MTV Networks," a package of digital television program services offered for distribution by digital technologies. The following year, it formed the MTVi Group, L.P., an Internet music network.

INFLUENCES

MTV's popularity created a contradiction. In its early days, part of the appeal to a young audience was the underground nature of the network. This sensation was heightened by the obvious fact that it did not have much money. Soon, MTV was realizing tremendous profits - and found itself in an ironic situation. It promoted rebellion and anti-materialism, yet it was an extremely profitable corporate entity. This irony was heightened in 1985 when it became the property of the conglomerate Viacom.

Soon the complaints rolled in. An "MTV Hater's Web site" even surfaced on the Internet. The general opinion was that there was too much non-music programming. The shows that had been hits were running their course and nothing substantial was replacing them. The public decided the network was not in touch with the trends.

A document, referred to as the "Melissa Memo," served to change MTV's direction. Written by two interns named Melissa, the memo made its way to Judy McGrath, MTV's president. It said in effect that MTV had become too dark, too lame, not happy, clean and bright. They wanted their MTV back. McGrath immediately acted on the critique, which happened to coincide with her latest research.

FAST FACTS: About MTV Networks, Inc.

Ownership: MTV Networks, Inc. is a wholly owned subsidiary of Viacom International, Inc., a publicly owned company whose stock is traded on the American Stock Exchange.

Ticker Symbol: VIA

Officers: Tom Freston, Chmn. and CEO; Judy McGrath, Pres. MTV, Chmn. MTV Interactive; Mark Rosenthal, COO; Richard J. Bressler, CFO Viacom/MTV Networks

Principal Subsidiary Companies: The major subsidiaries of MTV Networks are MTV Music Television, VH1, Nickelodeon, and MTV Films (in association with Paramount Pictures).

Chief Competitors MTV Networks compete with television and cable stations broadcasting music and children's shows. Major competitors include ABC, CBS, NBC, Fox, and The Family Channel.

MTV underwent a makeover. It got rid of the shows considered dull and replaced the VJs with people who knew music. A new animation series, Daria, debuted to enthusiastic responses. A new studio in Times Square was built, with music hours shown live for the first time. Interviews with and programs about musicians, along with more focus on news, brought back the networks' popularity.

CURRENT TRENDS

In the 1990s, three of the leading trends at MTV were politics, the Internet, and the tension between musical and non-musical programming. The focus on politics began with the 1990 "Rock the Vote" advertising campaign, which featured performers such as Madonna urging young viewers to go out and vote for the candidate of their choice in the national elections held that year. In 1992 and 1996, MTV stepped up its involvement in the presidential elections with its "Choose or Lose" campaign. Then Governor Bill Clinton gained huge points with the youth vote by telling MTV viewers that he had tried marijuana but "didn't inhale." Even such conservative politicians as Senator Bob Dole and House Speaker Newt Gingrich appeared on MTV. According to a Rolling Stone article, however, it appeared that neither "Rock the Vote" or "Choose or Lose" had any noticeable impact on getting out the youth vote.

In addition to its political involvement, MTV became heavily involved with the Internet. In addition to its own Web site, in 1994, the network joined with America Online in establishing MTV Online, which offered users an opportunity to have an online MTV chat and to gain a direct link to "The MTV Beach House."

Non-musical programming such as The MTV Beach House raised charges from critics that MTV was no longer a music network. In August 1996, exactly 15 years to the minute after the launch of MTV, the network introduced MTV2: Music Television, a "free-form" 24-hour music station with a broad play list of artists and a heavy concentration on music.

By the late 1990s and early 2000s, MTVN became heavily oriented toward technology to strengthen its appeal to an emerging audience of young people, who as Brian Graden, President of MTV Programming, put it, "have had a remote control the entire time they've been alive." Accordingly, MTVN developed programming that was of a more participatory nature, featuring programs like "Total Request Live," where viewers could choose videos as well as see themselves on screen, and "Fanatic," where the viewer could interview a celebrity.

PRODUCTS

MTV and VH1 began developing networks to suit the tastes of different people and keep up with competitors. The company created several new products, including: MTV Ritmo, Latino music; MTV Indie, college and independent label music; MTV Rocks, hard rock and heavy metal; VH1 Soul; VH1 Country; and VH1 Smooth, featuring jazz. In 1997, MTV introduced MTV News Unfiltered, which allows for audience participation. In 1998, MTV had 20 pilots in development for original programming, including "Ultra Sound" and "True Life," both documentary series.

Nickelodeon planned to extend its prime time programming in 1998. Since the network began primetime programming for children in September of 1996, over 2.5 million children were tuning in each night, more than any competitor attracted. Nickelodeon acquired the rights to the Peanuts series in 1998, and launched new cartoon OhYeah! Cartoons! featuring new characters each week. The network also opened three Nickelodeon stores in 1997, selling clothes, games, videos, and other merchandise stamped with Nickelodeon characters.

CHRONOLOGY: Key Dates For MTV Networks, Inc.

1981:

MTV is born

1984:

MTV holds its first Video Music Awards; MTV launches VH1, a music channel aimed at older listeners

1985:

Viacom International buys MTV

1987:

To keep up with its audience's changing tastes, MTV shifts its programming away from music videos

1992:

MTV goes political and covers the 1992 presidential campaign; MTV introduces the raunchy cartoon "Beavis and Butt-Head"; MTV enters cyberspace with MTV Online

1996:

MTV Productions in association with Paramount Pictures releases the feature film "Beavis and Butt-Head Do America"

1999:

MTV's Original Movies for Television Division airs its first film

In 2001, MTV's regular series included "Total Request Live," "The Real World," "Road Rules," and the ever-popular "Celebrity Deathmatch," which showcases Claymation likenesses of celebrities ripping each other apart in WWF-inspired wrestling matches.

IN THE LAND OF OZ

Years from now, when pop culture observers inevitably write their high-minded histories about mass entertainments, they'll no doubt refer to the first years of the twenty-first century as the era of reality TV programming.

Reality TV is a concept MTV helped advance with "The Real World," a sort of docu-soap opera that served as a model for the CBS game show "Big Brother," which, like the mega-popular "Survivor" (another CBS hit), added its own elements to the prototype.

As the CBS programs demonstrated, the reality concept easily attached itself to other genres. But leave it to MTV to come up with the most compelling and most watched hybrid: a "reality sitcom" called "The Osbournes"—a "day in the life" account of heavy metal rocker Ozzy Osbourne and his eccentric family.

Actually, the true antecedent for "The Osbournes" is not really "The Real World"; rather, the adventures of Ozzy and Sharon and the foul-mouthed little Osbournes harken back to a 1970 PBS show called "An American Family," a weekly cinema verite that, among other things, revealed the real-life dissolution of a marriage and allowed one son a very public platform on which to stage his coming out of the closet.

The appeal of "An American Family" certainly resided in the viewing audiences' innate voyeuristic impulses. The same is true of "The Osbournes." How-ever, there is a much stronger sense of sideshow voyeurism attached to the MTV show. What compels viewers who watch "The Osbournes" is the same kind of curiosity that attracted crowds to carnival freak shows, and that is what is largely responsible for its phenomenal popularity (the show is watched by those well outside of the traditional MTV demographic). A viewer may sometimes wonder what kind of test tube spawned the children, and Osbourne, who once gained a great deal of notoriety when he bit the head off of a live bird, is very much a modern version of the old-time carnival "geeks," desperate people in the last stages of chronic alcoholism who were exhibited in traveling carnivals as wildmen. Among other gross acts, "geeks" would chew the heads off of live chickens. As compensation for their degradation, "geeks" were given a warm place to sleep and a daily bottle of liquor.

Of course, Osbourne, 53 years old in 2002, is far from destitute (he lives in Beverly Hills), and he is a reformed alcoholic. But "The Osbournes" often depicts him wandering around his mansion in a somewhat addled and oblivious state, trying to make sense of all of the craziness surrounding him. Watching him, one can't help think of the dissipating lifestyle embraced by many heavy metal rockers. And therein lies its humor.

What also makes the show so funny is that Osbourne represents a hilarious anachronism. He is as out of place in Beverly Hills as Jethro Bodine. Also, at times, he can be a walking set of contradictions. He'll admonish his children for their sometimes bad behavior as well as their outlandish sense of style, despite his own bad boy past and his former rock star flamboyance. Osbourne, as music fans will recall, was lead singer of Black Sabbath, one of the most notorious heavy metal bands in the most lunkheaded of musical genres. Osbourne later claimed that at one point during the band's career, he was in an "altered" state of mind every day. When Osbourne went solo, his reputation became even more notorious and, just like the geeks of old, he was legally forbidden to perform in various communities. (Staid old Boston and conservative San Antonio wanted nothing to do with his brand of entertainment).

Despite his inclinations and antics, his marriage has proven stable and lasting. He married Sharon Arden in 1982. Their children, Kelly and Jack, are 17 and 16 years old, respectively. Reportedly, the idea for the show was Sharon's.

As it turned out, "The Osbournes" became MTV's highest rated program ever. On March 26, 2002, in its regular Tuesday night-time slot, the show attracted 4.1 million viewers. Success was so great that MTV started airing the show as many as 15 times a week. The advantage this provided MTV is obvious: the network can use "The Osbournes" as a way to promote the rest of its schedule.

One of the most interesting consequences of the show's success is that for members of the viewing audience who are over 40—those who sneered down their noses at "Sweet Leaf" and laughed out loud with derisive pleasure at the lyrics of "Iron Man"—it is actually cool to like Ozzy.

The MTV Interactive network, MTVi, offers music via MTV.com, VH1.com and SonicNet brands, as well as 13 international sites for music lovers in regions such as Latin America, the United Kingdom and Japan. MTV.com is targeted at the12 to 24 age group, while VH1.com targets an audience 25 years or older.

CORPORATE CITIZENSHIP

MTV devotes millions of dollars of air time each year to programming that serves the community by highlighting issues such as teenage violence, AIDS, drugs, education, and the environment. VH1's "Save the Music" campaign aims to restore music programs to public schools. Since its inception in 1997, the program has restored music classes to 91 schools, affecting 27,000 children.

GLOBAL PRESENCE

Into the late 1990s, the MTV Networks reached viewers all over the world. MTV alone was viewed by 68 million households in America. By the new century, it was reaching more than 340 million households in 140 countries through 31 TV channels and 17 Web sites. Affiliates include MTV Australia; MTV Brazil; MTV Europe, an English-language network that reaches viewers in 38 countries; MTV India; MTV Japan; the Spanish-language MTV Latin America, based in Miami; MTV Mandarin; and MTV in the United Kingdom, launched in 1997. Nickelodeon's networks reach the Australian, British, German, and Latin American markets. VH1 has German and British affiliates.

In 2000, MTVN Europe introduced MTVF, a programming service targeted at French-speaking viewers in France, Switzerland, and Belgium. That same year, MTV Polska was launched, offering 24-hour, Polish-language music programming. Also in 2000, MTV España was introduced to 1.5 million homes in Spain, the Balearics, and the Canary Islands. In 2001, MTV launched a new 24-hour, Korean-language music channel for Korean audiences.

EMPLOYMENT

The corporate culture at MTV Networks is non-existent in the expected sense. Employees are generally young and dress casually. Bosses are friendly co-workers, not critical overseers. Those at the top of MTV's management believe that work should be fun and everyone's ideas should be encouraged and examined by all.

Brian Graden, President of MTV Programming, once remarked that anyone signing up to work at MTV as an executive had to care deeply about "what it's like to be 21 years old and to see the world from their point of view and to celebrate the art that they celebrate."

SOURCES OF INFORMATION

Bibliography

Boehlert, Eric. "Rock the Vote." Rolling Stone, 23 January 1997.

Gunther, Marc. "This Gang Controls Your Kid's Brains." Fortune, 27 October 1997.

James, Caryn. "'Party Pitch' and 'Politically Incorrect' Put Their Spin on Convention." The New York Times, 15 August 1996.

Lewis, Michael. "The Herd of Independent Minds." The New Republic, 3 June 1996.

Murphy, Mary. "Defying Convention." TV Guide, 31 August 1996.

Seabrook, John. "Rocking In Shangri-La." The New Yorker, 10 October 1994.

"Star Woes." Economist, 11 April 1998.

Stein, Joel. "The M is Back in MTV." Time, 1 December 1997.

Wild, David. "Television: Techno, Anyone?" Rolling Stone, 6 February 1997.

Macavinta, Courtney. "Viacom's MTV Makes Major Net Music Drive." Tech News-CNET.com, 14 November 1999. Available at: http://news.com.com.

"Teen Burned Imitating MTV Stunt." Your1voice.com, 29 January 2001. Available at: http://www.your1voice.com/CtTeen.htm.

"Viacom's MTV Networks and Cablevision Sign Long-Term Affiliation Agreement." Yahoo! Finance, 29 January 2001. Available at: http://biz.yahoo.com.

"The Merchants of Cool." PBS Interview of Brian Graden on Frontline, 12 October 2001. Available at: http://www.pbs.org.

For an annual report:

on the Internet at: http://www.mtv.com or write Investor Relations, Viacom, 1515 Broadway, New York, NY 10036

For additional industry research:

Investigate companies by their Standard Industrial Classification Codes, also known as SIC codes. MTV's primary SIC is:

4841 Cable and Other Pay Television Stations

Also investigate companies by their North American Industry Classification Codes, also known as NAICS codes. MTV Networks, Inc.'s primary NAICS code is:

513220 Cable and Other Program Distribution