For MTV Networks Europe, the French market could be a key barometer of its success in 2003. The channel provider, one of the largest in Europe, increased advertising revenues by around 20 per cent in 2002, but still sees a number of challenges ahead. Improved performance in the critical French market is key to the company’s future success.

Brent Hansen, CEO of MTV Networks Europe, told Interspace: “My sense is that we can move forward in [the French] market this year. Last year was not our most stellar performance, although in terms of advertising we did very well and had double-digit growth. But, I feel we could put a lot more focus in that market.”

While the French market is a key focus for MTV in 2003, the UK market will remain at the center of the provider’s attention. In recent months, the UK market has seen a series of new music channel launches from EMAP, which is aiming to slice into MTV’s market share. Most of the channels are simple select and play video offerings, which are cost- effective to offer.

Commenting on increased competition in the UK market, Hansen said: “With more channels coming into the market, we think we are running a 20 per cent lead on EMAP bouquet of channels. That is not a huge amount and we definitely want to increase that gap. I believe with BSkyB coming into the market place and launching its own channels, this will cannibalise the EMAP guys. Sky is selling advertising for EMAP, which presents a problem for EMAP more than most.”

UK satellite broadcaster BSkyB announced March 10 that it was launching three music channels, named Flaunt, The Amp and Scuzz, in April. According to BSkyB, Flaunt is a mix of chart music, fashion and gossip that is aimed at girls aged 13 to 16. Scuzz is aimed at the 15- to 19-year-old men who are into “disruptive” rock, and The Amp provides music catered for a male audience between 25 and 29.

While MTV will try and trade on the quality of its programming in terms of access to stars, events, etc., Hansen has clearly been quite surprised by how the UK music market has developed. The pressure is clearly on MTV, like never before, with EMAP increasing the heat with low-cost channels that are proving effective. Hansen said he was “surprised that so many people are going into the market thinking they can make money out of it.” He added, “There are low barriers of entry for digital. What surprises me is the lack of creative effort that people put into it and how cynical broadcasting is. I never thought of the UK as being a cynical market. I always looked up to it when I didn’t live here.”

MTV may also try to drive its broadband offerings in the UK. Its initial broadband service saw the light of day in Scandinavia, but MTV hopes to add this element to its content in other markets. “We have some UK distribution deals on the way,” he said. Broadband service needs to provide a “very clean and stable” live performance music channel, Hansen said. MTV is testing a “two-way pipe,” but progress has been a bit sluggish. “We are about as far ahead as anybody, but it is still pretty slow,” Hansen said.

The situation appears to be better in Germany, despite advertising revenues dropping by 10 per cent last year. MTV’s main competition comes from VIVA. The competition between the two is intense. Hansen feels that MTV has the edge, although he concedes that that has not always been the case. However, momentum has swung in MTV’s favour.

While music channels are the staple of MTV’s business, its parent company, Viacom, has a number of other channels such as Nickelodeon, Paramount, etc. With consolidation of satellite pay-TV operators gathering pace in Europe, MTV could flex its financial muscles to buy other assets, although not necessarily other music channel providers. Options include a TV-based business if it adds value to advertising sales and creates other synergies with MTV, Hansen said. –Mark Holmes