Mag Rack Cuts Staff, Shifts Content Strategy

Cable World, August 11, 2003

Byline: SHIRLEY BRADY

Rainbow Media's Mag Rack video-on-demand service has gradually shifted to using outside producers and production partners for its up to 40 VOD channels. This evolution paved the way for last week's sudden dismissal of Mag Rack's entire production and programming staff, including SVP of programming and production Michael Connor.

A Rainbow spokesman confirmed the layoffs by reading a prepared statement: "Rainbow has made a strategic business decision to use third-party entities for the development and production of original content for Mag Rack's on-demand service, which has resulted in a small reduction of staff."

He declined to confirm how many staffers were let go - some reports estimated a dozen - or how many employees remained, which one report estimated to be just four. Mag Rack EVP and GM Matt Strauss was unavailable for comment.

Mag Rack last month inked a multiyear distribution deal with Mediacom, which plans to start adding it on Aug. 31 to its systems in Mobile, Ala., Moline, Ill., and Des Moines, Iowa. Mag Rack is also available to Cablevision Systems' (Rainbow's owner) and Insight Communications' digital cable subscribers.

Although the service also has a multiyear deal with Charter Communications, it has not yet been launched. "We're still in discussions with Mag Rack, and nothing's been solidified as to launch plans," said a Charter spokesperson.

Video Magazine Rack, the only other VOD service in Mag Rack's space, is owned by Primedia, which publishes Cable World. The two services announced a content partnership in 2001, but Primedia went solo last year with its own service. Its only cable distribution deal so far is with Comcast on Demand, now in Philadelphia, New Jersey, Massachusetts and Delaware.

Tara Maitra, EVP and GM of Video Magazine Rack, says the service gets a take rate of 13% on Comcast with average repeat viewers of 3.5, putting it with the top content providers for Comcast's basic VOD.

"Our numbers are getting better each month," says Maitra. "We are fourth among all content providers in take rate, which has climbed to 13.4%" for June, the most recent month for which data is available. But, she says, "The overall numbers are still not something we can build an ad model on."

The top performers? "Our auto content - based on Motor Trend, Hot Rod, Import Tuner - is performing very well, and teen news is very strong." The success of that latter category will contribute to Comcast's addition of a teen VOD channel featuring content from Primedia's Channel One teen service.

Both services have new video magazines launching in the next few weeks. Video Magazine Rack is launching two new channels next month - Equus for horse enthusiasts and Power & Motor-yacht for boaters - while Mag Rack is launching new seasonal content for Total Ski and Total Snowboard, on Oct. 30.

THE NEXT QUESTION:

*Will Mag Rack have to start giving away content in order to strike deals with MSOs that are reluctant to pay for content in the still-emerging VOD business?