It was a classic Golf Channel exchange, as warm and fuzzy as a monogrammed bathrobe. Arnold Palmer, dapper in his gold-and-black Wake Forest rep tie, grinned impishly as Golf Talk host Vince Cellini ended a one-on-one interview with a game of Palmer Trivia.
The first time you drove a Cadillac, whose was it? "George Fazio's, absolutely. He slept in the back."
The place where you spent your honeymoon night with Winnie (Palmer's late wife)? "On the Pennsylvania Turnpike, Breezewood exit."
Golf Channel fans lap up such Hallmark moments when the greats of the fairway act like real people, albeit with flawless swings. In a moving interview on the Golf Channel in 1995, Johnny Miller tenderly recalled the death of his brother. Last year, Gary Player yodeled.
Such programs have turned the eight-year-old Golf Channel into an unlikely cable hit. Now, a raft of startup nets are aiming to walk in its spikes. This year, cable surfers may have their pick of 24-hour channels for tennis, football, ice skating, college sports--even a Black Belt Channel showing wall-to-wall karate competitions and old Bruce Lee movies.
How many of those same startups will be off the dial by 2004 is the question. "Not to say there won't be some successes--inevitably, there are. But it'll be a huge challenge," says Jack Myers, editor of Jack Myers Report, a media industry newsletter.
At minimum, launching a cable network is a $30 million proposition, say industry insiders. (The Golf Channel's backers had $80 million invested before its debut.) Getting to positive cash flow is a longer haul--a minimum of two to three years and an investment north of $120 million. The Golf Channel claims that it became profitable four years after its launch in 1995, though Golf Channel President David Manougian declines to say how profitable. "We just don't talk about financials," he says. John M. Mansell Jr., an analyst at Kagan World Media, says that based on estimated revenues for 2002 of $157 million, he believes the Golf Chanel is profitable.
To attract advertisers, it helps if fledgling nets have deals with major cable operators such as Time Warner Cable Inc. (AOL
) or Comcast Corp. (CMCSK
) That's not a problem for the Orlando-based Golf Channel: Comcast owns 92%, Tribune Co. (TRB
) 8%. Manougian also declined to talk about debt Comcast may have assumed.
Such alliances can be elusive, however, as many of the fledgling one-sport channels are learning. College Sports Television, which will showcase 25 college sports, has yet to announce a distribution deal, though it is set to launch on Feb. 23 and counts Kevin Garnett, Tiki Barber, and Joe Namath among its backers.
The sizeable hurdles don't seem to be curbing any enthusiasm. "A college sports channel struck me as a big idea that had somehow mysteriously been overlooked," says Brian Bedol, one of College Sports Television's founders and creator of Classic Sports Network, for which ESPN paid $180 million in 1997.
Steve Bellamy, founder of the Tennis Channel, says his network is a no-brainer given the short shrift tennis gets on cable TV and the popularity of the women's tour. "As an industry, we've done a pathetic job of marketing our assets," says Bellamy.
The Golf Channel was far from a sure thing when founder Joseph E. Gibbs, an Alabama businessman, began planning it about a decade ago. One of Gibbs's first calls was to his friend Palmer, now 73, who invested and, more important, lent his bankable name. "I was very skeptical at first" of the potential audience and advertiser backing for a 24-hour golf network, says Palmer. "So were a lot of people." But it proved a hit with a college-educated, mostly male audience tuning in for tourney coverage and tips from pros who are still with us and those who aren't (vintage footage features lessons with Bobby Jones).
The Golf Channel also is hot with advertisers, such as golf-equipment manufacturers and financial-services companies, which like its affluent audience. "We're not the most efficient buy for Tide. But we're a really smart buy for Mercedes," says Manougian. If some of the copycats can come up with a sales pitch as smooth as that, they may have a chance of duplicating not just the concept but the profits--whatever they are.
By Mark Hyman in Orlando
Get BusinessWeek directly on your desktop with our RSS feeds.
Add BusinessWeek news to your Web site with our headline feed.
Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video.
To subscribe online to BusinessWeek magazine, please click here.
Copyright 2003, Bloomberg L.P.
Printer-Friendly Version
