The fashion channel case

no brandingno positioning strategy no detailed segmentation

CNN: fashion Tonight

Lifetime: fashion Today

The fashion channelMain competitors

TFC CNN Life�me

Interest in viewing 3,8 4,3 4,5

Awareness 4,1 4,1 4,5

Perceived Value 3,7 4,6 4,4

Alpha research study on customer sa�sfac�on with cable networks

Respondents were asked to rank on a scale of 1-5 5= Most/Very/High; 4= Somewhat; 3 =Neutral/neither high nor low; 2= Not much; 1= Lowest/not at all)

Affiliate Fees $80 million The fashion channelSources of Revenue

Advertising Sales $230 million

clusters

2006 Actual 2007 Base Scenario 1 Scenario 2 Scenario 3

Ad Sales $230 630 400 $207 567 360 $249 080 832 $322 882 560 $345 945 600

Affiliate Fees $80 000 000 $81 600 000 $81 600 000 $81 600 000 $81 600 000

Total Revenue $310 630 400 $289 167 360 $330 680 832 $404 482 560 $427 545 600

Cost of Opera�ons $70 000 000 $72 100 000 $72 100 000 $72 100 000 $72 100 000

Cost of

Programming $55 000 000 $55 000 000 $55 000 000 $70 000 000 $75 000 000

Ad Sales

Commissions $6 918 912 $6 227 021 $7 472 425 $9 686 477 $10 378 368

Marke�ng &

Adver�sing $45 000 000 $60 000 000 $60 000 000 $60 000 000 $60 000 000

SGA $40 000 000 $41 200 000 $41 200 000 $41 200 000 $41 200 000

Total Expense $216 918 912 $234 527 021 $235 772 425 $252 986 477 $258 678 368

Net Income $93 711 488 $54 640 339 $94 908 407 $151 496 083 $168 867 232

Margin 30% 19% 29% 37% 39%

Revenue

Expenses

TFC Estimated Financials

The fashion channelScenario 1

BROAD APPEAL

The fashion channelpluses

All segment includes female 18 – 34

Awareness and viewing delivera rating boost of 20%

No incremental programming expense

Rating increase 20%

The fashion channelminuses

The risk of higher expansion of competition

Not targeting a specific cluster of segment

CPM decrease 10%

The fashion channelScenario 2

Fashionistas

The fashion channelpluses

CPM Increase 75% to $3,50

Focusing on female between the age of 18 -34 (Premium age)

Strengthen the value of the audience

The fashion channelminuses

Add new programming $15mln additional coast

Higher risks to lose contracts with cable operators due to decrease rating from 1% to 0,8%

Targeting small percentage of HH only 15%

The fashion channelScenario 3

Fashionistas, Planners & Shoppers

The fashion channelpluses

CPM Increase to $2,50

Targeting 50% of TV HH, of which 50% female and 25% of them are 18-34 age

TV Rating increase to 1.2

The fashion channelminuses

Add new programming $20mln additional coast

Could decrease rating in the long-run

Might decrease loyal customers if they are not included in these segments

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