Meet the Programmer: The Filipino Channel-An Offer MSOs Can't Refuse?

Cable World, May 15, 2006

The fledgling Filipino Channel wants to give its cable subscribers discounts on phone calls home. Why aren't MSOs dialing in?

By Catherine Applefeld Olson

The Filipino Channel (TFC) parent ABS-CBN Broadcasting has a business plan that can help cable operators attract the 2.4 million-strong Filipino- American population. By offering subscribers discounts on products from TFC sister companies, it believes all ships-including cable's-will rise.

Problem is no cable operator has taken TFC up on its offer, although DirecTV subscribers are benefiting from these price cuts.

Another problem for The Filipino Channel: Its cable penetration remains anemic at 112,000 digital-tier subscribers.

TFC features news and entertainment programs, primarily in the Tagalog language. The lion's share of programming comes from the Philippines, where ABS- CBN is the largest media company. Cleverly, the network is stepping up content produced in the U.S. that's aimed at Filipino-Americans.

The company recently relocated to Redwood Shores, Calif., and is building a studio where it aims to produce 20% of TFC programming. "In order to take TFC to the next level we need to create local programs relevant to Filipino-Americans," says Rafael Lopez, TFC managing director/COO.

It seems like a good strategy. Series that home in on the experience of first- and subsequent-generation Filipino Americans are among TFC's hits. Popular shows include Citizen Pinoy, which gives immigration advice; Balitang America follows Filipinos and Filipino-Americans in the news; and Pinagmulan: The Journey Home tracks a Filipino-American family on a visit back to the Philippines.

Game show Wowowee and Philippines Basketball Assn. games are also big draws. But ABS-CBN wants to give TFC's cable subscribers the same incentives it offers 85,000 DirecTV customers who pay $22.99 per month for a six-channel bundle including TFC; Filipino movie channel Cinema One Global; ANC, an English- language news channel; Pinoy Central, a regional sports and travel channel; and two Philippines-based radio stations.

Those subscribers receive a free monthly English-language celebrity magazine StarStudio and discounts on shipping from ABS-CBN-owned StarKargo, from ABS-CBN's money remittance company Tawag-Remit and on CDs and DVDs. They also get 20 minutes of free calls to the Philippines every month, a $4.60 proposition.

"It's a formula that's really working for us," Lopez says. "It creates real stickiness with the customer because they are not just going to you for entertainment."

DirecTV says TFC's customer loyalty program is wholly an ABS-CBN operation. It merely supplies subscriber data as governed by federal law. DirecTV says it receives no financial benefit.

"We share limited customer information with ABS-CBN, which then offers ancillary services to DirecTV customers who receive ABS-CBN programming," says DirecTV's Robert Mercer. ABS-CBN also is an independent retailer of DirecTV receiving equipment and obtains information directly from its own customers, according to Mercer.

ABS-CBN's U.S. division launched the cargo and money remittance ventures three years ago. They generate less than 10% of its revenue, according to Lopez.

Despite digital carriage deals with Charter, Comcast, Cox, Insight, Time Warner and others primarily in California, none of TFC's cable viewers get the product discounts.

The History

TFC has had a touch-and-go relationship with cable from the start. The network launched in 1994 with eight hours a day on John Malone's TCI system in Daly City, Calif. It went to 24 hours, added systems and began receiving inquiries from around the country. To meet demand, it launched TFCDirect!, a 24- hour satellite channel using leased transponder capacity from Galaxy 4. In 1998 ABS-CBN switched from analog broadcast to digital, moved to the Telstar 5 satellite and launched two additional channels-ANC, a 24-hour news channel, and a 24-hour Filipino movie channel. Last July, the company migrated all its satellite subscribers to DirecTV.

"Satellite shares more information with us about who our customers are and about churn, and they are more willing to do joint marketing campaigns," says Lopez. "With cable I have no idea who the end-user is. I just typically receive a check in the mail at the end of the month and the number of subscribers I have."

The root cause could well be cable's long-standing culture of keeping subscriber data-and marketing info-close to the vest. Cable operators are more reluctant than their satellite counterparts to offer network- or demographic- based customer incentives, notes Steve Hoffenberg, director of electronic media research at Newtonville, Mass.-based Lyra Research.

"Cable is in more of an entrenched mode, trying to maximize the revenue it can get from the subscriber pool it already has," Hoffenberg says. "For these kinds of [customer] programs there's a question with MSOs of whether what they would get out of offering it would offset what the costs are."